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.

Contributors

  • Becky Wanta, President and CEO, RSW1C Consulting
  • Jeff Sherman, former VP Business Solutions and VP Finance and Operations, Torstar Digital
  • Patrick Savard, Principal, Savard Solutions, LLC
  • Kirk Rothenberger, CIO, Essar

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Get to Action

  1. Make the case

    Understand the benefits, risks, and challenges of budgeting.

  2. Launch the project

    Prepare for IT budgeting and establish a clear budget target.

  3. Collect data and organize

    Obtain the necessary data sources and validate data from IT systems.

  4. Forecast capital costs

    Understand best practices for capital budgeting.

  5. Forecast operating costs

    Understand best practices for operations budgeting.

  6. Aggregate and validate the budget

    Ensure budget includes required information.

  7. Sell the budget

    Construct a budget presentation.

  8. Prepare for future budgeting success

    Build budget capabilities in people, process, and technology.

Guided Implementation icon Guided Implementation

This guided implementation is a four call advisory process.

  • Call #1: Project launch

    Know where you are – and where you’re going: discuss how budgeting has gone in the past and launch a strategy that will improve success. Identify potential advocates and construct a pre-selling strategy. Assemble a project team.

  • Call #2: Forecast capital costs

    Achieve accuracy without taking on too much effort: develop a forecasting methodology that will forecast the costs of ongoing and new capital projects. Discuss the effects capital projects will have on operating costs.

  • Call #3: Forecast operating costs

    Accurate and quick: develop a forecasting methodology that is simple but comprehensive. Discuss how inflation, changing vendor prices, and other factors will affect your costs.

  • Call #4: Sell the budget

    Master the art of the budget presentation: practice discussing business and IT projects in business terms in a way that emphasizes value delivery. Examine strategies for building credibility using the history of IT budget performance and explaining variance. Discuss key visual diagrams and how they will fit in your presentation.

Onsite Workshop

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.

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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 road map in place to complete your project successfully.

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