Dear Bob ...I would like to raise a topic that needs to be considered in this rapidly growing age of technology.I'm interested in the trend most companies have about making IT Departments an income rather than expense unit. The reason I want the issue raised is that many of the IT developments now are profit-making entities for the company. For instance, a financial institution can attribute much of its profits Dear Bob …I would like to raise a topic that needs to be considered in this rapidly growing age of technology.I’m interested in the trend most companies have about making IT Departments an income rather than expense unit. The reason I want the issue raised is that many of the IT developments now are profit-making entities for the company. For instance, a financial institution can attribute much of its profits to IT teams that develop products such as phone banking, online banking, and so forth. Have you heard much mention of this or know companies that allow IT units to be profit instead of liabilities? If so, can you share some articles and facts surrounding this?– Profit-mindedDear Profit-minded … I have covered this topic from time to time (I think). It’s usually implemented through the mechanism of “transfer pricing” – what used to be called “chargebacks” until some clever consultant decided he or she could charge more money advising on transfer pricing because it sounds more sophisticated.A couple of past Keep the Joint Runnings you might of interest are “The value of an enabler,” (2/10/2003) and “Who’s your customer now?” (2/28/2005).It comes down to this: Businesses can decide to make IT and every other internal service department profit centers. Doing it well is an interesting academic exercise. The supposed value comes from making everyone responsible for the costs they drive by charging them for those costs, just as if they were to purchase the same services from an outside vendor. It looks great in the PowerPoint, and it generally works the way so many PowerPoint concepts work – perfectly, except for the unintended but easily predicted consequences.It isn’t all that different from trying to cure a disease by feeding poison to the patient. The poison kills the germs, just as it’s supposed to do. That it also kills the patient falls into the category of “oops!”In this case, transfer pricing drives the creation of heavily-walled political silos, the mis-handling of corporate overhead, messy technical architecture through inappropriate outsourcing, and the complete loss of ability on the part of the enterprise to act as a single entity with a single purpose. Here’s another way of looking at the issue: Some businesses have figured out that accounting reports provide only an incomplete picture of the health of the enterprise. They implement “balanced scorecards” to give them a more complete view of things.Companies that try to turn every department into a profit center through chargebacks figure the opposite: If they’re only clever enough, they can use their accounting system as the sole means for understanding, not only the health of the enterprise, but also the health of every component of the enterprise.Call it the fractal theory of management, fractals being the branch of mathematics dealing with structures that look the same at all levels of magnification. My opinion is that it’s an attempt that mistakes cleverness for wisdom. – BobPowered by ScribeFire. Technology Industry