Budgeting is an important part of managing an IT organization. No matter the size of the shop, every IT manager grapples with funding, performance and financial pressures.
This all seems to come to a head during the budget cycle. IT leaders are in a quandary when it comes to the budget. In many organizations, the budget and revenue department view IT as a cost center, while other officials want IT to be strategic and ROI-focused. It’s nearly impossible to satisfy both sides.
But the budget cycle doesn’t have to be something that IT leaders simply endure and survive — it can also be a time for them to shine and thrive. There are some simple steps IT leaders can take to make progress during the budget cycle and deal with their funding dilemmas. All organizations are different, but the need to manage funding for the agency is common to all.
Begin before everyone else does (which means before your internal and external customers do). Decide what is important, which areas need investment and which should be constrained. If you wait until you receive a budget packet spreadsheet to complete, you have lost. Get your staff, customers and boss together and discuss what needs to change, what the priorities should be, what has worked in the past and what the obstacles are.
The IT team can’t sell its budget the same way that tourism or facilities sell their budgets. Frequently, IT budgets benefit a wide range of departments within the larger government entity. Because IT is typically a support service and enterprise function, it needs customers to advocate on its behalf. If the IT function is decentralized, focus on the parts that are common to the enterprise.
Does the budget request for the email system upgrade help the police department? Ask them to mention it in their budget presentation. It’s always more powerful when multiple customers advocate on your behalf. Meet with users to identify areas where you can help each other. For example, I know of a CIO who partnered with the fire chief and the police chief to request the hiring of another desktop analyst in the IT department. The idea was that the analyst would support both the police department and the fire department. Both chiefs mentioned the need in their budget meetings and advocated on behalf of the CIO for the funding.
Although the temptation to keep a low profile during the budget cycle may be strong, IT leaders need to do just the opposite. If your organization is looking at making cuts or reducing the budget, this may be hard. When people are making funding decisions about the future of the agency, the IT leader should be visible and seen as someone who is working hard to help the agency achieve its goals.
The budget review meeting should be held with the most senior leader available. The review should be as early in the budget process as possible, before executive budget meeting fatigue sets in. Meeting frequently with the budget department will also help keep your needs in the forefront.
Budget season is also a time for government leaders to rebalance funding among organizations. Be prepared for this. Maintain a portfolio of technology assets (people, programs, hardware, licenses and services) and be ready to illustrate the impact of reducing any of them. The portfolio should include users associated with each asset, their importance to the organization, investments to date, anticipated replacement cycle and so on. Why? IT managers are often told to just absorb budget cuts, and unless they have a valuation of their assets and understand the potential impact of cuts, all they can do is comply.
While working for the commonwealth of Virginia, I conducted an annual exercise to predict the impact of 3 percent, 5 percent and 10 percent reductions in agency budgets. By referring to the reductions in terms of impact on services, I provided the decision-makers with an accurate frame of reference. I remember working with one agency and describing the cessation of a program for inmates trying to obtain a GED and the likely affect on the recidivism rate if the cut went through. Ultimately, the program was retained. The lesson: Always relate the reduction back to an impact that others can understand.
To protect the budget and gain more money for technology investments, IT managers need to convince their internal customers and business partners that the work of the IT department will ultimately make others successful. IT projects that benefit only the technology department get cut. IT projects that are tied to the success of other departments may get a second look — and, naturally, will receive advocacy from those departments.
While managing a software development group elsewhere, I had the opportunity to sell the concept of a consolidated security system to store credentials for dozens of applications. This project never would have received funding if it had benefitted only the IT group.
Because I was able to illustrate how many more applications we could securely bring on board for our customers, the speed with which the applications could be deployed and the reduction in resources across the business required to maintain the information, we received approval and were able to develop the system. Ultimately, the project was a huge success, maintaining the credentials of more than 90,000 associates and controlling access to dozens of systems.
The budget season is an absolutely critical time for IT leaders. Don’t avoid it, and don’t dread it. Leverage the budget process to gain visibility for the IT department, foster better support from internal customers and forge a stronger organization.