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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 4:  Improvements In The IT Budget Process Can Pay Off

As the importance, and cost, of information technology has grown, private and public organizations find that the old ways of making IT budget decisions are no longer viable. For some, the changes are radical and far-reaching (e.g., the US Congressional mandate to federal agencies to implement comprehensive IT investment management practices). Others are making improvements one step at a time (e.g., the CIOs that use a spreadsheet to tally and track IT projects).

Here are three types of improvement initiatives and their benefits:

Initiative   Purpose   Benefit

Consolidated Projects List:

IT budget planning process starts before the organization’s process. IT managers submit summary project data for consolidation into a single spreadsheet

  Provide CIO with a complete picture of all proposed projects, their costs, and priority ranking; CIO and senior management have a more objective basis for making decisions   Enables CIO to present total project requirements picture to senior management; priorities become a decision factor; CIO can better demonstrate that users, and not the IT organization, are driving costs

Total Budget Management:

IT organization’s budget process provides key cost and resource information; commercial budgeting application facilitates management

  Provides complete view of all IT costs (both recurring and project) and budget justifications. Implementation status of senior management decisions can be monitored; deviations are identified and can be corrected timely   Management gains a total picture of activities, projects and their costs. Budget process and supporting system enable extensive analysis during planning and implementation; CIO gains knowledge in lieu of anecdotal data

Investment Management Approach   Assure that the "best" IT decisions are made and that desired results are achieved on time and within budget   Comprehensive, long-term view treats IT as an investment instead of an expense; costs are weighed against long-term needs and benefits

Regardless of the approach, the payoff is better and faster IT budget decisions.

What Every Manager Needs To Know About Budgeting, Lesson 12 of 14

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