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Subject: Information Technology Budgeting

Tutorial: What Every Manager Needs To Know About Budgeting


Five Facts Every Manager Should Know About Budgeting

Fact 2:  Budget Dollars Are Limited

It is not uncommon for IT managers and technical staff to wonder why their organization’s don’t simply give them the money they need to do their jobs.

One of the most important concepts to understand is that no organization, regardless of size, has an unlimited amount of money to spend on IT. As noted earlier in this tutorial (Misconception No. 3: "Budgeting is just a numbers game"), budget decision-makers must allocate the available money among all parts of the organization; not just the IT organization.

Ordinarily, IT professionals respond to this by saying, e.g., "All I am asking for is just one more network engineer; filling this position is not going to bankrupt our organization." This posture seems plausible, until we step back and take a broader view.

IT organizations don’t have just one manager seeking to fill just one position; often, there are hundreds of managers. If each manager is allowed to fill "just one more" position or purchase "just one more" server than planned and budgeted, the odds are that the organization’s overall financial plan will be placed at risk.

Budgets do serve as a mechanism to help organizations govern expenditures; they also reflect what:

  • IT management said they needed to do the job
  • IT management was able to prove was needed
  • senior management is willing and able to pay for IT
  • projects / activities senior management authorized the IT organization to undertake

What Every Manager Needs To Know About Budgeting, Lesson 10 of 14

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