Budget wisdom 1

This post is the first chapter of a lot more to come regarding budget processes for IT. This is a domain where although many efforts are made... process is often a painful and sub-optimal exercice.

My first comment will be on the frequency of the process itself: IT budget takes place once a year, and can take days and weeks (who says months?) of painful negotiation between business line managers, CIO(s) and CFO(s).

The end result is generally a one page synthesis presented together with a list of projects with budget asked for the coming year, envelops for applications maintenance & baseline (which can be infrastructure, management cost and more generic stuff). Most time is spent on discussing the budget for projects whereas it generally represents less than 30% of the overall budget.

Budget for IT should take place much more frequently than yearly. Business moves faster than the year - especially those days, and IT systems taking generally more time to adapt than business, it is necessary to revize its budget and resource allocation more frequently than once a year. A real time allocation of resource and budget to the best initiatives, to the best projects / application evolution budget envelops is an ideal... difficult to achieve. Still, a good governance with frequent re-prioritization of budget allocation brings a lot of value to the organization. So at the higher level of the organization, a quarterly revision of budget allocation is good practice.



The yearly exercice then becomes a natural global discussion where IT investments can be compared with other departments investments.