Perceived Chargeback System Fairness in Decentralized Organizations: An Examination of the Issues

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SKU
13.4.3

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Abstract
Problems can arise in decentralized organizations when usage-based chargeback systems are implemented to control computing resources. A case study of a company that is changing from negotiated pricing to full cost pricing illustrates the fact that concerns about fairness can arise not only with respect to specific characteristics of the chargeback system (e.g., understandability, controllability), but also as a result of central management policies governing internal transactions between the users and MIS. In particular, this examination identifies three factors that affect the fairness perceptions of autonomous divisional managers: (1) a high degree of interdependence between user divisions and MIS such that the behavior of MIS could have a significant impact on divisional performance; (2) restrictions on divisional managers’ freedom to purchase computer services from external sources; and (3) the tendency for full cost to exceed market prices early in the life of a data center. A dual pricing approach may be an interim solution to reduce conflict and improve user perceptions of fairness.
Additional Details
Author Ellen M. Hufnagel and Jacob G. Birnberg
Year 1989
Volume 13
Issue 4
Keywords Chargeback systems, chargeout systems, cost allocation, resource allocation, transfer pricing
Page Numbers 415-430
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