For example, the CIO may provide all IT services within the company and assign the costs back to the business units that consume each offering.
Depending on the operating structure within a company, the cost allocation data may generate an internal invoice or feed an ERP system's chargeback module.
Today’s organizations face growing pressure to control costs and enable responsible financial management of resources.
In this environment, an organization is expected to provide services cost-effectively and deliver business value while operating under tight budgetary constraints.
[1] According to the Office of Management and Budget's (OMB) Uniform Guidance, there are only three types of costs – Indirect, Indirect-Admin (Overhead) and Direct.