Overview

The amount of money organizations spend on IT systems and services is known as IT budget. It’s also included the payments of IT experts and expenditures related to construction and care of enterprise-wide systems and services.

IT budget is basically seen/managed by the organization top executive, the CIO (Chief Information Officer). The scope and distribution of IT budget has become more complex as IT has become the center to business results and not all IT expenses are fall within the IT department. 

Understanding

Budgeting is a process of allocating money/resources to various IT programs. These could range from frequent expenses like hardware leases and employment to expenses dedicated to a fixed-duration projects. In some companies this is mostly an annual exercise, while other companies might demand budgets for each initiative as it rises.

Types

There are mainly four types of budgets:

  1. Incremental Budgets
  2. Activity-based Budgets
  3. Value proposition Budgets
  4. Zero-based Budgets

Approach

A well established and presented budget should be the numeric indicator of your IT strategy that's well communicated and understood by your peers. When done right, budgets should only support what's already been understood and should get approved with negligible pushback. We are going to discuss four best practices to make your IT budget and planning process much more effective and less dependent. 

  1. Set expectations in advance
  2. Build the case for each business unit starting from market demand
  3. Define the strategic role each business unit plays in the overall portfolio
  4. The actual resource allocation decision should be done vertically rather than horizontally.

Other Info About Budgets

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Carlos Corral Allari, Inc.

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