During the main fishing season, these fishermen have to go to sea even at night. Many fishermen noticed that during night journeys they had problems of navigating their way back to the village because of one factor or another. The possible solution to the problem is to build a light house to guide these fishermen who are working at night. Though there are many fishermen working at night nobody wants to pay for the lighthouse because he thinks that even if he doesn’ t pay for it, the village will pool the money and will build a lighthouse anyway.
And after a light house has been built no one can stop him benefitting from it. So, he won’ t pay for it and still utilize all the possible benefit of a light house. Similarly, if the costs are not allocated among the departments according to their usage and these departments are charged a fixed proportion then all the departments will try to use these I. T resources as much as they can, as they have to pay a fixed amount no matter how much they use it.
In such an event, there will be wear and tear of resources, an obvious wastage will occur and these resources will not be used efficiently. All departments will try to free-ride on the back of others. So, the charges of these resources are based on consumption so that no one will use the resources inefficiently and if any wear and tear occur then the responsible department has to bear the cost which leads to efficient and careful use of these resources. (Example is taken from “ Economics” book written by Collin Bamford, 2005, Section Public Goods and Costs).
Now let’ s take an example from our I. T context. Suppose that a person develops an application. There are very high costs involved in developing this software which makes it difficult for him to cover these costs. What he can do is that he can monitor and meter each request of resources from various departments of a firm that is a usage-based-model is going to be used. What happens in this process is that each department is given a unique ID or number.
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