One limitation of internal charges

August 29, 2007

One of the things that is popular in universities and companies is charging for internal services. The hope is that this will cause people to be 'efficient' in both what services they use and how they provide services, much as if the various groups were real companies doing business with each other. However, this is an illusion.

One of the ways that this is an illusion is that a university cannot let a consumer group fail if it cannot pay its bills or doesn't have any money, the way a real company would fail in the same situation. Ultimately, someone in the university is going to get stuck with cleaning up the messes, whether or not those cleanups are funded.

(Sometimes universities can't even really let a service provider group fail that way either, whether because of policies on staff employment, issues of morale, or the need to keep expertise.)

That everyone is actually operating in a common shared environment makes any messes worse; groups are far more affected by each other's problems than they would be if they were independent companies. In other words, messes are (to some degree) shared messes, and worse, messes that affect the university as a whole, because to the outside world we are a single organization.

(This is going to be especially acute for things that are legal requirements, such a student privacy.)

There is at least one form of company that operates in an environment very much like this: banks. For some reason I do not see anyone rushing to hold them up as a model for internal charging and operations.

Written on 29 August 2007.
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Last modified: Wed Aug 29 23:35:15 2007
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