non-technical Internal Billing

Question

Hi,

This is a non technical question, but I am quite interested to see how other software houses do this. We have two functional departments, Development and Support. Development make the stuff, support will install / maintain.

From time to time support have technical issues that are beyond them, and require the assistance from developers. As a result there are opportunity costs in terms of lost dev hours.

I am no accountant but there must be a way to "bill" the support department as we would a client - effectively shifting budgets around.

Do any of you work for companies that do this?

Craig

Answer 1

I have never seen this sort of thing (billing across dev and support) during my career working for software product companies. And further, I have seen it best when development and support work closely together. You could make an argument that whenever development gets involved with a support issue there is an opportunity to improve the product to remove or mitigate the support issue. So I think this is not really lost hours at all, it's an opportunity to get real-world feedback to improve the product.

Answer 2

It depends how deep the developers gets involve into the support process. You client wouldn't like to get bills for using your support just b/c they couldn't solve the problem.

So - you need to push these costs into the development costs - so you will have enough "support" hours of developers after the development was finished.

if the clients need new features... then you can start billing...

You shouldn't bill "support" for using "Dev" for help.. as they will start billing "support" for education, and it will never ends.

just regulate 5% of development power to support, and follow up to see if it's enough.

Answer 3

"I am no accountant but there must be a way to "bill" the support department as we would a client - effectively shifting budgets around."

And the support counter-argument would be to bill 'development' for every serious bug found that takes more time than expected to solve, as these problems eat into their budget too and are arguably caused by development.

That said, where I work, which is an outsource environment (rather than product development), the project that delivers a new system or function has budget for a 'warranty period' after a release. After that there is a change to the customer contract to add the costs of supporting the new release. After that, whether it is 'support' or 'development' booking their time to fixing bugs, it is both done against that fixed annual support budget

Answer 4

In our house, every product has a budget for support. Any hour spent to answer questions is reported on this item. This also helps to steer product quality: When the hours go up, our management can do something about it.