- IT is viewed as a cost center without a clear understanding of the value it provides.
- After completing the budget, the CIO is faced with changing expectations, disruptions, new risks, and new threats.
- IT departments often lack a reliable budget management process to keep itself on track towards its budget goals.
- Over budgeting risks credibility if projects are not all delivered, while under budgeting risks not being able to execute important projects.
Our Advice
Critical Insight
- Managing your budget is not just about numbers; it’s also about people and processes. Better relationships and a proper process leads to better management of your budget. Understand how your relationships and current processes might be leveraged to manage your budget.
- No one likes to be over budget, but being under budget isn’t necessarily good either. Coming in under budget may mean that you are not accomplishing the initiatives that you promised you would, reflecting poor job performance.
Impact and Result
- Implement a formal budget management process that documents your planned budget and actual expenditures, tracks variances, and responds to those variances to stay on track towards budget goals.
- Manage the expectations of business stakeholders by communicating the links between IT spend and business value in a way that is easily understood by the business.
- Control for under- or overspending by using Info Tech’s budget management tool and tactics.
Manage an IT Budget Research & Tools
Start here – read the Executive Brief
Read our concise Executive Brief to understand the increasing expectations for IT departments to better manage their budgets, review Info-Tech’s methodology, and understand the four ways we can support you in completing this project.Besides the small introduction, subscribers and consulting clients within this management domain have access to:
- Manage an IT Budget – Phases 1-3
1. Document
Create a streamlined documentation process that also considers the elements of people and technology.
- Manage an IT Budget – Phase 1: Document
- Manage Your IT Budget Tool
2. Track
Track your planned budget against actual expenditures to catch areas of over- and underspending in a timely manner.
- Manage an IT Budget – Phase 2: Track
3. Control
Leverage control mechanisms to manage variances in your budget.
- Manage an IT Budget – Phase 3: Control
Workshop: Manage an IT Budget
Workshops offer an easy way to accelerate your project. If you are unable to do the project yourself, and a Guided Implementation isn't enough, we offer low-cost delivery of our project workshops. We take you through every phase of your project and ensure that you have a roadmap in place to complete your project successfully.
1 Document Budget
The Purpose
The first step of managing your IT budget is to make sure there is a properly documented budget that everyone agrees upon.
Key Benefits Achieved
A properly documented budget facilitates management and communication of the budget.
Activities
1.1 Review budget for the year.
1.2 Document each budget in the tool.
1.3 Review CAPEX vs. OPEX.
1.4 Customize accounts to match your organization.
Outputs
Budget broken out into monthly increments and by each account.
Budget documented in tool.
Tool customized to reflect organization's specific accounts and terminology.
2 Optimize Documentation Process
The Purpose
A proper documentation process forms the backbone for effective budget management.
Key Benefits Achieved
A streamlined documentation process with accurate inputs that also considers the elements of people and technology.
Activities
2.1 Draw out process flow of current documentation.
2.2 Identify bottlenecks.
2.3 Discuss and develop roadmap to solving bottlenecks.
Outputs
Process flow of current documentation process with identified bottlenecks.
Plan to mitigate bottlenecks.
3 Track and Control for Over- and Underspending
The Purpose
Track your planned budget against actual expenditures to catch areas of over- and underspending in a timely manner. Then, leverage control mechanisms to manage variances in your budget.
Key Benefits Achieved
Tracking and controlling for variances will help the IT department stay on track towards its budget goals. It will also help with communicating IT’s value to the business.
Activities
3.1 Walk through the “Overview Bar.”
3.2 Document actual expenses incurred in fiscal to date.
3.3 Review the risk of over- and underspending.
3.4 Use the reforecast column to control for over- and underspend.
Outputs
Assess the “Overview Bar.”
Document actual expenditures and committed expenses up to the current date.
Develop a strategy and roadmap for how you will mitigate any current under- or overspends.
Reforecast expenditures for each account for each month for the remainder of the fiscal year.