As the 2014 calendar year approaches, many CIOs are determining their budget requests for the new year. Given all of the news surrounding the cloud and the increased tech-savviness of many marketing departments, it can be a harrowing process as more and more parts of the company attempt to encroach on IT’s territory. However, the IT budgeting process is, underneath it all, no different from other business budgeting processes.
Before devising a budget, CIOs should step back and look at what their business needs to succeed, especially in light of the technologies being used by competitors. This can help define how much budget a given IT department needs for new initiatives. It is also important to look at the zeitgeist of the business as a whole. A request for a budget increase that would be reasonable in a growing and profitable business is less likely to be successful in a company that is losing money.
Presenting Business Cases
Once the CIO devises the budget, it should be sold in the language of business. This means that every request should be accompanied by a description of which goals it will achieve and what its measurable return on investment will be. At the same time, the CIO should also describe the requests relative to what other competitors are spending. Finally, a business case for a change in budget should also be supported with data showing the CIO and IT departments’ track record of success, pointing to the likelihood that the projected benefits will materialize.
In addition to these principles, CIOs can craft the perfect 2014 budget by also remembering two fundamental rules. The first is that every dollar spent on IT is a dollar that the company can’t spend on improving its products, building its brand, or selling its products. The second is that every spending item should be one that CIOs would be willing to make themselves out of their own pocket. CIOs that follow these rules are more likely to have success in justifying and achieving their desired budgets.