Internal "sales"

• Customer-supplier agreements among managers for internal indirect support services

  When one group serves others within the department, the internal customer group(s) must decide the level of service.

  If the internal customer agrees, costs are transferred to the internal customer's spreadsheet and amortized across all its deliverables.

  Key learning: Our peers are our customers, and have the right to decide what they'll buy from us. Our peers are our suppliers, and we must be frugal in what we buy from them.

• Leadership team approves organizationwide overhead services

  Overhead deliverables are approved by the senior leadership team, then their costs are amortized across all groups' deliverables.

  Key learning: Overhead drives up everybody's costs. Which overhead services are really worthwhile?

• Resolution of circularity in calculations due to internal sales

  Within an organization, when A sells to B, B sells to C, and C sells to A and B, circularity in the calculations results. In practice, organizations have a spider-web of such internal customer-supplier relationships. This circularity can be broken with minimal distortion if it's interrupted in just the right places.

  Requirements: Tools to break circularity in the calculations without introducing material distortion (a second-generation cost model).