by Jarrett G. Meiers

6 secrets for getting your next budget approved

Apr 15, 2016
BudgetingBusiness IT AlignmentIT Governance

In order to get new IT initiatives off the ground you will have to create a compelling budget. Use these six tips as a guide and you will definitely gain points in the board room.

If you want to guarantee the resources to invest in new technology you must illustrate the value and benefit these investments will provide the business.

Since a large portion of IT budgets are earmarked for compliance, replacement, and upgrades you may be finding little room for technology initiatives that can have an impact on growth and innovation. Compounding the problem is the added scrutiny and oversight that comes with continual cost increases. In order to get new initiatives off the ground you will have to create a compelling budget.

Use these six tips as a guide and you will definitely gain points in the board room.

1. Anticipate the businesses needs

A strategic approach will make the IT department a stand-out partner.

As most of the IT budget is made up of recurring operational items such as systems, licenses, and leases, the remaining budget should be planned for carefully. Have conversations with department leaders and managing executives related to their needs and upcoming pushes. They may be breaking into new markets or looking to improve productivity. Technology is meant to support this type of business growth, and this is where you can make the biggest impact. Planning with business need in mind will gain you allies and make it easier to make the case to secure the requested budget.   

it budget sample

2. Metadata is your friend

Categorization and Tagging increases transparency and simplifies sorting.

Just like a blog post, you should add tags and categories to your items. High-level categories are an easy way to group purchases together and assign them to a certain department. Also, additional information such as capital costs and recurring costs will allow your finance department to make better sense of the implications of the purchases and how to apply the tax benefit.

There are many ways you can categorize and tag your purchases but at a minimum I suggest using a high-level class and sub-class system. For example:

Class: Hardware

  Subclasses: Desktop, Laptop, Tablet, Monitor, Network, etc.

Items should clearly fit into a single category, so make sure you think out your choices before committing them to your plan.

3. Provide goals for each item

Explaining the “why” behind each item gains buy-in and traction.

We often talk about what we are going to purchase or upgrade but less often do we discuss the why behind the purchase. A great trick to get executives to understand how this spending will improve the business is to assign goals to the budget.

Examples of goals you may provide:

  • Improve service levels
  • Cut costs
  • Meet security needs
  • Enhance customer experience
  • Grow market share
  • Increase competitiveness
  • Expand collaboration
  • Automate business processes
  • Optimize investments
  • Business continuity

Now when you explain the spending for a project such as a new client portal or server virtualization you can easily include the benefits associated with it.

4. Prioritize your spending

Budgets get cut unexpectedly so make it easier to decide what stays and what goes.

Applying a simple High / Medium / Low prioritization scale to your line items and projects provides an understanding of the urgency and costs related to those priorities. This will also help you quickly identify the most important initiatives for the year, and give you a quick answer if the unfortunate question comes up of what to cut.

5. Budget for unplanned expenses

Surprises happen and you should be prepared for them.

I know it seems counter-intuitive planning for these since they are “unplanned”, but adding in a category for miscellaneous and unplanned purchases will make your life easier. Everyone knows things fail unexpectedly and urgent needs come up so you might as well have an area that addresses the very real possibility. I wouldn’t go overboard with this but leave enough room for some of the more common failure points such as computers, monitors, printers, peripherals, and network hardware. 

it budget summary

6. Align your plan with the CFO’s vision

A CFO likes to understand your spending plan and loves to know when that spending will occur.

Since IT purchases can be costly, big time technology spending in one quarter versus another can mean the difference between a good year and a bad year for the entire company. I recommend aligning spending with the CFO and the calendar. Purchasing on a relatively even scale throughout the year makes forecasting easier for the CFO and limits any year-end surprises that may come about from overruns or unplanned purchases. Generally, the budget will be entered into the companies accounting software split across 12 months, so telling management when large purchases will take place helps with cash-flow and operational planning. This will gain you points every time.

 By illustrating the value technology provides you will have an easier time getting executives on your side. Remember, your budget doesn’t exist in a vacuum, you are always up against another budget and their list of requests This is why a smart budgeter will always include transparent and clear information that makes a strong case for spending. Business executives don’t understand the intricacies and terminology of technology so it is your job to make it easier for them.

Demystifying your budget will pave the road for approval and give you the budget you need.

IT Budget Template
A simple IT Budget template to get started Jarrett Meiers