Develop Successful Strategies for Budget Planning, Proposal, and Negotiation

Don't just pick a number: prepare realistic budget proposals for success.


Your Challenge

  • IT budget negotiations usually result in fewer dollars than IT leaders think they need. Preparation for negotiations is essential: a well-informed IT leader with valid reasons for budget requests is more likely to get what they need.
  • Contingency planning is seen by executives as “fluff” and “buffers” above actual requirements, making it the first area to suffer cuts. Accurate projections will ensure that IT completes at least all planned work, should the contingency disappear.
  •  IT leaders fall into a bad estimation trap, often thinking that accuracy is a waste when asking for enterprise cash.

Our Advice

Critical Insight

  • Invest the time to understand what resources will be required to meet current service levels, the changes required to support organizational unit plans, and the changes to IT needs.
  • As budget levels are always constrained:
    • Understand what the constraints are early; don’t wait to have a budget proposal trashed
    • Find ways to reduce expenses on adjustable non-discretionary expenses to create capacity for new initiatives
    • Negotiate priorities with the business units; not all demands can be met
    • Back-up estimates with evidence of likely costs; be credible
    • Provide detailed documentation
  • Anticipate adjustments to budget proposals:
    • Take constraints seriously: they are not mere guidelines
    • Avoid imposed cuts by providing detailed budget documentation
    • Seek ways to get funding for essential initiatives that have not made the cut
  •  Approved budgets determine IT’s capacity. Getting what IT needs in order to deliver required services should be the objective of the budget process.

Impact and Result

  • Understanding projected resource constraints and capacity requirements before budget pitching forces management to make hard decisions ahead of time. This can reduce the strain on IT and limit wasted efforts by increasing the accuracy of proposed (and approved) budgets.
  • Formal budget proposals may be tedious, but when based on accurate projections, IT is more equipped to support and argue their case for cash.

Contributors

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Get to Action

  1. Understand budgetary basics, planning requirements, success metrics, and best practices.

    Successfully plan budgets and obtain resources  and support.

  2. Establish capacity and resource requirements, create a realistic budget proposal, and a readiness checklist.

    Determine realistic approximations for budget proposal and ensure adequeate support for requests.

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2 Comments

  • Missing comment
    Michael Day | 08-13-2010

    Do you have any information regarding MicroStrategy and Epiphany products or installations? We are looking at both of those solutions now. Just wondering how they rate among other products and vendors in the same space.

    • 9eb6a2810126f534ebf65557616f34d1 comment
      Info-Tech Research Group | 10-21-2011

      Thanks for your comment. The two products mentioned represent two totally different types of tools. MicroStrategy, which is a broad-scope Business Intelligence tool, is reviewed in our Solution Set titled, Deliver the BI Tools and Info Needed by Management. The Epiphany accounting system has a basic budgeting component. If a client has either of these products, they can help with budget preparation and financial analysis, but I wouldn’t try to compare them directly with each other.

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