IT Credibility Challenge #5: Your Budget - Page 2

Apr 18, 2008

Patty Azzarello

Make IT budget priorities equal the business’ priorities by explicitly aligning them with the business priorities and tagging the line items using the business names. For example, Instead of “Oracle CRM contractors”, have the budget line item say, "Enable 20% Growth in Eastern Europe."


If you take the time to get the business stakeholders to ratify the IT plan and budget that supports the most critical business priorities, and you present the budget in those terms, you will find that your budget will be less likely to be cut. You will also save a lot of time answering questions about why things cost so much and why you are spending money on one thing over another.


Negotiating Room


Whenever I manage any kind of project or budget, I always take the approach of using three columns. If you have your budget rolled up into only one column or list, the only conversation you can have is whether or not something should be on or off that list. If you make three lists: one for Musts, one for New Projects, and one for Strategic Initiatives, you can accomplish two key things.


  • Once people agree on the Musts you can take that budget off the table. (You have to follow the first two rules to get away with this: 1) Show that you are proactively reducing the cost of keeping the lights on and 2) describe the musts in terms the business will understand.)


  • Then you can move all the discussion and negotiation to the second two columns on New Projects and Strategic Initiatives and let the business argue amongst themselves about the priorities of how to spend the remaining money.


This approach gives you a tremendous amount of negotiating power and keeps the debate where it should be: how should we be investing in IT vs. how should be cutting IT.


By being seen as proactively managing spending, and connecting your IT budget more explicitly with business initiatives, you can engage your business counterparts in a discussion of how the company should invest in IT vs. cut and build your credibility in the process.


[Editor's Note: If you are interested in more information about presenting your IT budget so you get to keep it check out Patty Azzarello’s CIO Working Guide, which includes budget presentation templates, and more detailed examples on presenting your budget to the business.]


For further reading on the CIO credibility topic, please see Patty's other articles in this series:


How to Overcome IT’s Credibility Challenges


IT Credibility Challenge #1: Understanding


IT Credibility Challenge #2: Inconsistent View of IT's Performance


IT Credibility Challenge #3: Costs and Benefits Transparency


IT Credibility Challenge #4: Stop Thinking of Your Helpdesk as a Helpdesk


Patty Azzarello became the youngest general manager at HP ever at the age of 33. She ran a $1B software IT management business at the age of 35 and was a CEO for the first time at the age of 38. She has been working with CIO’s for many years. Patty is the CEO of Azzarello Group which works with companies to develop and motivate their leaders and with individuals to create success in their business and career.


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