Wow the CFO with an IT Budget that Demonstrates Value Delivery

Get the budget you need to enable IT to deliver to its full potential.

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Your Challenge

  • IT cost pressure is fueled by negative sentiment; IT can be perceived as a high cost that does not deliver value.
  • Budgetary approval is difficult because finance executives have a limited understanding of IT and use a different vocabulary.
  • Detailed budgets must be constructed in a way that is transparent, but too much detail results in complexity that is confusing.

Our Advice

Critical Insight

A world-class budget tells the story of how IT is going to deliver value to the business.

  • Make the business your partner to understand their future needs.
  • Know how much money you’ll need and the value you’re going to deliver.
  • Communication matters; present clearly and credibly.
  • Help the organization make the right decisions by explaining the implications of their choices.

Impact and Result

  • Knowing the initiatives business units will propose allows you to get a head start on forecasting IT costs.
  • Presell ideas. Quick face-to-face chats about how a new initiative could benefit the organization can go a long way.
  • Do not pad key innovation project budgets; building the case for approval is difficult enough as is.
  • Forecasting operating costs requires an accurate view of historical costs and an understanding of how business changes will affect IT costs.
  • Anticipate the questions that will be asked; discretionary projects are often criticized and challenged. Think about areas that people will focus on, do research, and be ready to respond intelligently
  • An IT department can’t squeeze dollars out of rocks. Tie cost reductions to service reductions and deferred projects.

Wow the CFO with an IT Budget that Demonstrates Value Delivery

1

Prepare for budgeting

Get the information you need to get ready for budgeting.

2

Forecast your budget

Calculate your capital and operating costs and aggregate them together.

3

Create a compelling story of value to sell your budget

Construct a budget presentation and build budget capabilities.

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Expert Analyst Perspective

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Prepare for budgeting
Forecast your budget
Create a compelling story of value to sell your budget

Onsite Workshop

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Onsite 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 onsite 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.

Module 1: Make the Case

The Purpose

  • Definition of IT budgeting.
  • Recognition of the benefits of better budgeting.
  • Understanding the risks of budgeting.
  • Understanding the challenges of budgeting.

Key Benefits Achieved

  • You will achieve an understanding of how better budgeting can help your IT department.
  • You will achieve an understanding of the risks of poor budgeting.
  • You will achieve identification of budgeting challenges.

Activities:
Outputs

1.1

Discuss how IT budgeting works for your organization.

  • Identified budgeting pain points experienced by your IT department.

1.2

Brainstorm budgeting goals and understand what your IT department would do with a limitless budget.

  • Identified ways that the budgeting process is failing to meet your needs.
  • Set high-level budgeting goals.

Module 2: Project Launch

The Purpose

  • Preparing for IT budgeting.
  • Getting the right people in the room.
  • Understanding budgeting mechanics.
  • Establishing a clear budget target.

Key Benefits Achieved

  • Achieve an understanding of what business units are planning to do.
  • Achieve successfully pre-selling ideas; get support for IT initiatives.
  • Assemble a budgeting team and make sure resources are available for consult.
  • Determine your budgeting target.
  • Understand budgeting process.

Activities:
Outputs

2.1

Identify organizational goals and discuss impacts on IT budget.

  • A list of all goals that the IT budget would meet with a limitless budget.

2.2

Prioritize meeting the goals of finance and other business units.

  • A prioritized list of key goals that the IT budget must meet.

Module 3: Forecast Capital Costs

The Purpose

  • Forecast capital costs.
  • Understand best practices for capital budgeting.

Key Benefits Achieved

  • Achieve accurate budgets for the capital costs of innovation, maintenance, and business projects.
  • Achieve an understanding of best practices for capital budgeting.

Activities:
Outputs

3.1

Identify key projects.

  • A list of all projects that may launch this fiscal year.

3.2

Forecast capital costs.

  • Accurate capital cost forecasts.
  • Costs are classified as discretionary or non-discretionary.

Module 4: Forecast Operating Costs

The Purpose

  • Forecast operating costs.
  • Understand best practices for operating budgeting.

Key Benefits Achieved

  • Achieve an accurate budget that accounts for the operating costs by accounting for inflation, changing labor costs, changing prices, changing service levels, and the effects of capital projects.
  • Achieve an understanding of best practices for capital budgeting.

Activities:
Outputs

4.1

Forecast operating costs.

  • Accurate operating cost forecasts that account for inflation, changing labor costs, changing vendor prices, and changing service levels.

Module 5: Aggregate and Validate the Budget

The Purpose

  • Ensure budget includes required information.
  • Validate and fix anomalies.
  • Share your budget internally.

Key Benefits Achieved

  • Ensured all required information is included.
  • Identified and fixed errors.
  • Adjusted assumptions to yield greater accuracy.

Activities:
Outputs

5.1

Play devil’s advocate: take turns critiquing the budget.

5.2

Adjust the budget to tighten assumptions and correct errors.

  • A completed financial budget with accurate and defensible operating and capital cost projections.

Module 6: Sell the Budget

The Purpose

  • Construct a budget presentation.
  • Sell your financial budget.
  • Find additional cost savings to meet rework requirements.
  • Construct a revised budget proposal.
  • Sell your revised financial budget.

Key Benefits Achieved

  • Built a compelling budget presentation.
  • Built a revised budget presentation.
  • Practiced the presentation to improve delivery.
  • Found additional cost savings opportunities to suggest in the event of revision.

Activities:
Outputs

6.1

Build the budget presentation.

6.2

Mock presentations: practice the budget presentation.

  • A completed budget presentation that is compelling, well-rehearsed, and concise.

Module 7: Prepare for Future Budgeting Success

The Purpose

  • Building your budgeting people capabilities.
  • Building your budgeting process capabilities.
  • Building your budgeting technology capabilities.

Key Benefits Achieved

  • Build budgeting capabilities through improving human capital.
  • Build budgeting capabilities through improving processes.
  • Build budgeting capabilities through improving IT financial management technology.

Activities:
Outputs

7.1

Identify budgeting activities your IT department needs to stop doing, continue doing, and start doing.

  • A list of budgeting activities that your IT department needs to start doing.
  • A list of budgeting activities that your IT department needs to stop doing.
  • A list of budgeting activities that your IT department needs to continue doing.

Search Code: 74698
Published: April 21, 2014
Last Revised: October 21, 2014