The Art and Science of IT Budgeting

Lots of factors affect IT budgeting. New project, new budget. New revenue projections, new budget. New boss, new budget. New fill in your blank here, new budget. Information Technology costs money and so does Information Security. Yet, people in every role from sales rep to HR team member, to the CEO and Board Chair forget or are not aware of why information costs money. As the owner, manager, custodian, guardian, and creator of the Information budget, you create the stories to tell everyone why information costs money and do so in ways that each person understands your story, no matter their job or role.

On any random day you can find research declaring information budgets will increase this year, and you can find research stating information budgets will go down this year. Moreover, you can find the nine reasons to budget more along with the seven reasons to budget less. In other words, you can find a published opinion to support your view of information budgets no matter what your view is at the moment. However, none of the opinions matter when you have to stand in front of your boss, the HR Executive, or the Board Chair to ask for money so that you can meet the organization’s information deliverables.

As you consider the pulse racing moment when the number is released from your mouth into the world, be sure you have your stories, the art, and your facts, the science ready. Many IT and IS leaders show up to a budget meeting or strategy session with one or the other, art or science. Unfortunately, given the logic based population that choose IT and IS jobs, much of the time they show up with the facts but no supporting story. Having worked my way through many IT and similar roles I recall many budget sessions or requests that ended poorly because I had all of the facts like pricing, quotes, project outlines, and all of the logical budget supports. Unfortunately, I did not have the story, I did not bring the art.

Assuming many people reading this understand the science of budgeting, the natural logic of costs and planning to support deliverables, here are a few tips for the required art.\

Start With Why

First, read, listen, and understand Simon Sinek’s suggestion to Start With Why. Too many logic-driven people start with the numbers, the resources, or the plan which is an error. All of the people you have to convince to fund your information project are people first, and people like stories. Moreover, people like to contribute to things that are bigger that themselves. Your budgeting art task is to help each budget approver fell connected to the outcome your budget will deliver, to help them understand why they should fund your request ahead of other requests.

Keep It In the Non Fiction Section

Second, your story is not a fairy tale filled with magical outcomes or other dreams. Your budget story removes IT and IS from the request to focus on organization needs, the conversations, wishes, and wants of leaders in other parts of the organization; you know your customers and their customers. By shifting the focus to your customers, you shift evaluation process and ultimately the yes or no decision.

Consider these versions of the same budget request. IT needs $179,000 to upgrade the data base hosting platform because the old hosts have reached end of life and are slow. Versus, this $179,000 request will allow the Sales teams to view all prior customer orders while talking to them. This is not possible today because the end of life servers are too slow to support real time order reviews. The Sales team requested this functionality to support add-ons to prior orders based on the fact that most manufacturers warranties end 90 days after purchase. Knowledge of this timing will drive more warranty sales.

See the difference in the stories above? In the second version IT does not exist, though IT will manage all of the money and do all of the work. This is the same approach for IS budget requests. While many people read and hear about information security, information breeches, and the ever evolving threat landscape, they do not know how that impacts them or the organization. You must craft the story to move beyond the threats, beyond the fear, and beyond the clouds of confusion.

Prepare for the What-If Questions

Third, you cannot fixate on a number. While your vendor partner quotes, external consulting estimates, or service provider pricing plan provide the supporting facts, the science for the budget request, they are not fixed in stone, and they are definitely not guarantees. Everyone has heard of supply chain shortages, unplanned inflationary impacts, labor shortages or walkouts, and a dozen other factors that can blow your budget. As you prepare to present the science of your budget request, the part that comes after you help everyone understand why, be prepared to present the numbers as they are, e.g., show your quotes. Moreover, you must be prepared to answer the what if question. What if there is a strike? What if you cannot receive the ne equipment in time for the holiday buying season?  What if your budget request is 40% too low, and so on.

Being prepared to answer at least some of the what if questions demonstrate your understanding of budget realities. As an aside, one of the most difficult questions might be, what if we pull your funding 75% of the way through your request, what do we get then? If your answer is nothing, your budget will be too, it will not be approved. Thus, your science supports should also include staged deliverables associated with dollars, time, and other organization metrics e.g., number of salespeople hired this year etc. While some people will argue that building an airplane without an engine because the money ran out means that the deliverable is not possible or not worth starting, most of us are not building airplanes. The reality of today’s IT and IS deliverables that include on-demand services, cloud everything, and per instance charges means that while you may not deliver 75% if funding is pulled, you can deliver something, as long as you start with that end in mind. This is the crossroads of budgeting art and science. Know where you are going and budget each step to get there. Doing so helps the science inform the art. In other words, the facts can help you create the story  that people want to be part of. However, doing so requires connecting deliverables, that may be a long time away, to the needs, facts, and variables that exist today. That requires both budgeting art and science.

If you’re looking for IT solutions or help with your IT budgeting, contact iT1 today to learn more about our infrastructure optimization services.

AUTHOR BIO
Dr. Mike Lewis serves as Chief Information Officer, EVP of Informatics, Security & Technology for Trillium Health Resources, a managed-care organization serving more than 350,000 members in North Carolina. He earned his Doctor of Management degree from George Fox University and is a former MBA adjunct professor at Maryhurst University. Mike has worked in the IT field for more than 25 years with stints at IBM, Merisel, and Dell.

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