Who owns the IT budget? The answer to that question is increasingly important, especially in today’s competitive and changing business environment.
But, just as the answer is increasingly “important,” it’s also becoming more and more complex. These days, IT is vital to virtually all business functions.
So, who should determine IT priorities for throughout the enterprise? Does the CIO need complete control, or should other business managers contribute, as well?
An excerpt from the book The Adventures of an IT Leader, from Harvard Business Publishing, reveals just how challenging the budgeting process has become. In this sample chapter, titled “IT Priorities,” you can read about the struggles of a new CIO who needs to fund a necessary security project, one that has fallen victim to a flawed prioritization process in years past. As you might expect, the new CIO’s instinct is to advocate for complete control of the IT budget.
But, then, he’s reminded of the “one-neck-in-the-noose” problem, a conundrum that goes something like this:
In order to do a good job as a CIO, you need help from people in the business units, and ideally, all sides come together in agreement about the positions you’re taking. Naturally, generating that kind of consensus takes lots of work, but the process helps ensure that if something goes wrong, everyone has a little skin in the game. Some CIOs want to take a completely different tack, though. They want to assume complete control of the budget. But, that method comes with a significant catch: If something goes wrong, only IT will feel the “noose tightening.”
Clearly, it’s a thorny dilemma.
One answer is to adopt a new priority-setting process, and in the book excerpt, the new CIO considers a three-pronged approach that involves these parameters:
Although the excerpt only serves as a “teaser” – it doesn’t tell us how the new CIO solves his problem – it's a valuable discussion starter.
After all, odds are, it’s time the IT budgeting process at your company had a facelift. In most IT shops today, the consensus view is that the cost of budgeting, in terms of time and resources, is far greater than the value it creates. Most organizations need better than the inefficient, spreadsheet-based budgeting, forecasting and reporting models still in current use. They need a way to bridge the gap between the corporate general ledger and IT service costing.
The discipline of Technology Business Management is one approach that is helping to equip CIOs with the cost transparency and real-time data they need not only to evaluate cost drivers, improve performance, enhance innovation -- but also to take ownership of the budget and defend projects against cuts from outside sources.