How to do Successful Chargeback for Cloud Services Hristo Stefanov, 1,2 Slinger Jansen, 1 Ronald Batenburg, 1 Eugene van Heusden, 2 and Ravi Khadka 1 1 Utrecht University, Utrecht, The Netherlands {h.stefanov, slinger.jansen, r.s.batenburg, r.khadka}@uu.nl 2 IBM, Amsterdam, The Netherlands {hristo.stefanov, heusden}@nl.ibm.com Abstract. With pay-per-use pricing models, elastic scaling of resources, and the usage of shared virtualized infrastructure, ‘the Cloud’ offers more efficient use of capital, great cost reductions, and breakthrough agility. Yet, it turns out that to leverage the cloud advantages, organizations have to introduce cloud- specific chargeback practices. That is, they have to allocate IT service costs to business users in a way that reflects service consumption. To help organizations transition to a cloud environment, this work provides an overview of the factors that impact the design of successful cloud-specific chargeback models. The findings can assist organizations in the design of chargeback models that allow the business flexibility and cost reductions associated with the Cloud to be fully leveraged. The results are based on an empirical study involving twenty-five field experts from IBM and its client and partner network. Keywords: IT chargeback, IT cost allocation, billing, IT chargeback models, economics of cloud computing, and factors impacting chargeback success. 1 Introduction In Information Technology (IT) management, chargeback or charging, refers to the practice of charging the costs of IT back to the different departments and business units that use IT [3, 16, 31]. Chargeback makes service consumers aware of the costs of IT and it is generally used to control escalating IT costs, to improve decision making, to align behavior with organizational goals, and to lead to a more effective use of IT [13]. However, in comparison to charging back for physical products, chargeback for intangible products such as IT is still poorly understood by many organizations [16], and is rarely applied to their advantage because of the lack of successful chargeback models that are well aligned with organizational objectives and are clear and acceptable to all the involved stakeholders [26]. To make the situation more complicated, organizations are adopting cloud computing (CC), an environment with untraditional and non-fitting characteristics from a chargeback perspective. With pay-per-use pricing models, elastic scaling of resources, and the usage of shared virtualized infrastructure, the Cloud fundamentally changes the economics of IT [18]. It enables more efficient use of capital, cost