The thing that could make or break your 2015 IT budget

If you’re in a room full of business leaders talking about storage arrays — in great detail — you’ll probably be getting a lot of deer-in-headlights stares. And this typically leads to the response: “Your budget is too big.” But the reality is, they just don’t understand what you’re trying to get across.

So how do you create a budget and get approval for the funding you need? This was the question raised during a recent webinar hosted by Info-Tech Research Group.

To answer this question, it’s worth considering some of the reasons why you wouldn’t get approval for your budget, according to the firm’s experts:

• In some cases, increases are forecasted with little or no justification, or the budget lacks transparency and is not supplied with supported detail, said Bernie Gillies, executive advisor with Info-Tech Research Group.
• If the IT team didn’t perform well in the previous year’s budget, they may have no credibility with the organization. But in some cases the IT team can’t explain the numbers. It’s important to understand those numbers: both capital and operating expenditures, and where you need to apply depreciation.
• Ensure your budget captures current and future spending needs, said Gillies. That means understanding what’s required for business as usual and what’s nice to have — which gives you flexibility should changes be required.

Build a better IT budget

Of course, the budget should also be aligned with business goals and strategies. So, is the company in growth mode? Is IT just there to keep the lights on? Or is the company in a transformational mode and looking to IT for innovation? The IT team should be able to adjust to different scenarios.

The budget should be packaged in business terms, so senior execs can relate to the service being provided and understand what controls the business has over those costs, said Gilles.

It helps if the IT team, prior to submitting the budget, has researched other options so they’re not caught off guard by questions about alternatives to what they’re proposing. If you’re an in-house shop, for example, it may be worth looking into outsourcing, offshoring or cloud-based versions of major purchases.

Most critically, the budget should also be a “living” document, said Kirk Rothenberger, CIO of steel manufacturer Essar. “It’s not just, ‘Do I have a budget and will the executives approve it,’ but ‘Can I do financial forecasting, can the budget help me identify areas or cost elements where I can put in some continuous improvement to lower costs (and) get more performance?’”

Like Mick Jagger says, you can’t always get what you want (and, quite frankly, when it comes to IT you don’t always get want you need, either). But a thoughtful, detailed, transparent budget — one that is “living” and allows for flexibility over the course of the year as business needs change — can help you get as close to what you want as possible.

Photo Credit: 401(K) 2013 via Compfight cc