Using Budgets to Manage Your LOB Counterparts
The problem isnt that the LOB manager is trying to be difficult (okay, well maybe they are but ), the problem is you, as the CIO, are not communicating in a way so they understand why their pet-project isnt getting the attention they think it deserves.
This is where the budget comes in. When you talk in terms of the budgeta dollars-and-cents language all managers understandthen you can start to have a meaningful conversation about priorities, resources, wants vs. needs, and how IT maps to the rest of the business, said Steve Pickett, a past president of the Society of Information Management and currently the CIO of an $18 billion corporation.
To do the proper job as a CIO you need to bring this element of discipline into a company where youre tying the strategic plan to the budgeting process, to a process that has enough governance attached to it so that the (company) management can make a decision outside of the strategic plan to do a particular project, he said.
This is assuming your company has a strategic plan for IT, but even if it doesnt, talking in terms of budgets is still a way to show everyone what and why IT does what it does. Forget about technology-speak, focus on something everyone understands: Money.
It works by forcing a holistic approach onto the IT project decision-making process. If everyone sees where the money is going they will better understand what it means to deviate from overall IT strategy as it relates to the company, said Pickett.
If no strategic plan exists, focusing IT discussions around the budget will help break down IT silos and help alleviate the inevitable turf wars that erupt over who gets what and why, said John DeBenedette, VP of IT for INTTRA, a provider of e-commerce solutions to ocean carriers and their customers. It also provides an opportunity to get away from tech-speak and morphs the conversation into more meaningful business terms such as growth, productivity, cost savings, and the like.
If a CIO was concerned or if other execs (are) concerned with were doing what people want, perhaps were not aligned on what we need, he said. That resource allocation problem would be emotional, anecdotal without the backdrop of the budget, the transparency of the budget.
Mike Jones, corp. VP & CIO at Children's Hospital & Health System in Milwaukee, Wisc. uses his budget as an absolute delineator of what can and wont be done when it comes to IT spend at the hospital system, which also includes a social services arm, debt collection division, and a preferred provider organization (PPO).
When someone wants something that falls outside the parameters of the budget, unless they can find money elsewhere, the project is nixed, he said. Doing it any other way would be far to difficult and inefficient. Your budget really identifies Heres what were gong to do and heres why were going to do it, he said. Its really cut and dried.
Of course, there are always exceptions to very rule. Sometimes things just need to get done regardless of what the budget says. But, if your budget/IT/business alignment is in place, deviations will be easier to handle because they will be the exception rather that the rule, which is where most CIOs find themselves these daysdealing with exceptions as the rule.
In the end, the budget/IT/business conversation is really about good governance. If you have that, then everything else falls into line and can be dealt with proactively instead of reactivelyagain the situation most CIOs find themselves in today. If you dont have good governance, then the budget is a good place to start getting it.
I dont think that many companies have this type of discipline in place, but its something the CIO needs to bring to the company, said SIMs Pickett. To do the proper job as a CIO you need to bring this element of discipline into a company where your tying the strategic plan to the budgeting process; to a process that has enough governance attached to it so that the management can make a decision outside of the strategic plan to do particular project.