Allocations

When the Financial Management application allocates an expense, it breaks down the expense into detailed amounts of money called allocations.

The allocations are then associated to specific segments and accounts in the IT chart of accounts.

To allocate expenses, the application uses the following items, which comprise your cost model:

Bucket allocations
Allocation of a particular bucket to a segment or an account in a segment using allocation methods, using the rule to calculate the breakdown of the expense, either on an equal basis, manual, or weighted.
Segment rollups
Defines how the amount rolls up from one segment to another segment.
Rollup overrides
Amount from a particular account of a segment can roll up to any account or segment in the hierarchy.
Allocation metrics
Contain additional instructions that the application uses to allocate expenses based on a weighted calculation or on a script. A method can use one or more metrics.

When you use the workbench to assign expenses to accounts and segments, it creates all the rules, methods, and conditions automatically.

Users with the financial management administrator or financial analyst role can administer cost allocations through the workbench, which is the preferred method, or by using lists and forms.

Chargebacks

The application supports "chargebacks", or negative amounts in general ledger expenses that can be used to transfer credits between segments for a shared cost. Chargeback expenses process fixed amount methods in the opposite way of other expenses. For example, a fixed amount type method that allocates $50 on a $100 dollar chargeback, shown as "-100" in the general ledger expense, applies a $50 credit as specified by the rule.

Example Allocations

The demo data provided with the application provides good examples of different types of allocations. You can make several types of allocations, such as allocating:
  • Storage costs based on consumption
  • Private cloud costs based on usage of virtual machines
  • Servers based on cost, CPUs, location, and so on
  • Project management contract costs