When he presents his technology budget to senior
management, Edward Granger-Happ likes to talk about a ’57
“I tell them that we have to polish it and take care
of it, and [because] it’s a ’57 Chevy, we’re
living on borrowed time, especially if we’re using it for
the daily commute,” says Granger-Happ, CTO at Save the
The spiffy car is a metaphor for a legacy system in use at
the foundation, and it helps Granger-Happ make several points.
First, it puts the old system in a context everyone on the
business side understands. Second, it helps him make the
argument that systems not only come with maintenance costs but
that those costs grow (and take up more of his budget) as the
systems age. Third, he can tie maintaining or replacing the
“Chevy” to his strategic IT plan, priming the group
for a future discussion.
Granger-Happ says his approach to talking about the IT
budget usually gets him what he wants at the $400 million
nonprofit. His budget for the coming year is $4.7 million. But
he also knows that when the foundation sees fund-raising
tighten, as is the case for the coming fiscal year, he knows he
won’t get major new initiatives funded, and he
Though it may take up less than an hour at the executive
committee or board meeting, the budget presentation is one of
the most important messages a CIO has to deliver. What a CIO
says and doesn’t say—during both the actual
presentation and in the months leading up to it—sets the
course for IT not just for the next year but, where new
investments are concerned, for years to come.
Yet despite its importance, few elements of such a
presentation are universal. What matters in a budget
presentation depends on the priorities of the company and the
personalities of the CEO, the CFO and the board. That said, all
successful budget presentations do need to make a clear
business case for spending and especially for new initiatives,
and CIOs had better have support lined up from the business
units that should benefit. The presentation itself needs to be
concise and free of technical jargon.
Granger-Happ also says to tread carefully without being too
clever, recalling the once popular comparison between the
relative cost of computers and cars. “You remember that
comment that if cars were computers, Rolls-Royces would cost
$1,000 and get 100 miles to the gallon?” he says.
“It was pretty easy for [someone] to come back and say,
But they’d lock your windows every other week and crash
Here’s how to make your next budget presentation a
Do Your Homework
For many CIOs, the budget presentation itself is anticlimactic
because the budget has already been debated thoroughly during
the preparation phase. By the time the CEO sees it, there
should be no surprises on either side of the table.
Therefore, CIOs need to view the entire planning process as
a chance to communicate with the business side. That means at
minimum 60 to 90 days of parsing numbers, organizing projects
and setting priorities. The CIO should spend some of this time
on diplomatic sorties like lunch meetings with the CFO or with
department heads, in order to size up specific priorities,
preferences and potential trouble spots on which IT has an
Susan Cramm, an executive coach who was both a CIO and a CFO
(and is a CIO columnist), recommends CIOs break their budget
into two categories: project-based services and utility-based
services. Project services are typically simple to
explain—these are the projects the business units want or
will get obvious benefits from. Because they can be tied to
business results, their purpose is typically clear.
Utilities cover things like the help desk, network costs,
software maintenance, hardware and the like that constitute 60
percent to 70 percent of typical IT spending. “It’s
a huge number, and that number is a mystery to the
organization,” Cramm says. Thus, it’s also the
number that causes the most tension between IT and the business
side. “The CIO says, Why can’t you just trust me?
Why wouldn’t you expect to have to maintain those
systems?” Cramm says. “The business side says,
That’s a huge, hairy old number—why can’t you
explain it to me?”
She suggests CIOs present utility costs as if they were an
outsourcer, on a per-department basis, whether it’s for
e-mail usage, help desk calls or the network.
Some CIOs manage their budgets as portfolios of investment
opportunities in order to lend structure to a budget planning
process. Thought it sounds complex, it can be done with a
spreadsheet. “It helps you build a business case,”
says Keith Kerr, a director at consultancy Robbins-Gioia.
Describing the IT budget as a series of investments that
businesspeople can choose from is especially valuable when a
company doesn’t have the luxury of normal planning
cycles, notes Monte Ford, senior VP and CIO at American
Airlines. During his six years as American’s CIO, the
company has made a major acquisition, suffered through the
teeth of an industry-shaking downturn, endured a recession and
struggled with high jet fuel prices. Ford says his budget
allocations may shift by as much as 20 percent in a typical
year, and managing via portfolio helps him track all the
changes. He also makes sure to give the CEO and CFO at least
one budget update during the year, which helps the IT
department stay on top of how the budget is changing over
Business, Not Technology
First, avoid jargon. Instead, explain technology spending in
terms the business side understands.
It takes discipline to avoid slipping into tech-speak.
Granger-Happ tries never to get into the technical nitty-gritty
during a budget discussion. For instance, when someone asks
during a budget presentation how a wireless network will help
achieve business goals, he avoids talking about its speed or
range. Instead, because Save the Children wants to improve
network access for 3,400 of its field workers, many of whom are
in remote parts of the world, he talks about helping them
connect more readily.
Paul Cavanagh-Downs, CIO at Aristocrat, a gaming concern
based in Sydney, Australia, observes that getting technical
gets you labeled as disconnected from the business.
“The businesspeople will often try to get into the
technology, but it’s not a good thing,” he says.
There’s no gain for a CIO to explain the differences
between, say, a frame relay network and a multiprotocol label
switching network (MPLS). “Even if you’re asked the
questions, if you answer, you’ll still get labeled as
being too technical,” he says. It’s happened to
him, and he has business credentials as an accountant who
became CIO after a long stint in finance.
Cavanagh-Downs says his tack for avoiding technical
discussions during the budget presentation is to pause, then
use his answer to reframe the question: What matters is not the
technical difference between frame relay and MPLS, but which
one offers the business better flexibility or scalability.
At American Airlines, Ford goes one step further and tables
such inquiries. When businesspeople ask technical questions, he
directs them to prepared reference slides. Meanwhile, Ford
keeps budget sessions focused on the business by having his
lieutenants who work most closely with American’s
business units participate in each business unit’s budget
presentations. That strategy lets Ford’s department heads
show off their business expertise and prove that IT’s
portion of the payroll is going to good use.
Ford does not rely on charts to illustrate the value of IT.
“If I’m not doing my job in the eyes of my
counterpart [say, the marketing executive], no function point
analysis is going to tell him otherwise,” Ford says. Ford
cites his current budget planning, in which one emphasis is
faster turnaround on assignments. “We think we’re
pretty quick, and we’re faster than last year, but there
are a couple of business units that don’t agree with
that.” So rather than argue back with charts showing how
fast IT gets the job done, Ford’s managers will explain
how their plans will improve timeliness even more.
Some CIOs do, however, find that illustrating IT performance
sometimes helps them make their case. Kevin Kearns, the former
CIO and CFO (and now CEO) at Health Choice Networks in Miami,
found budget benchmarks to be an effective tool for quelling
unrest amongst the board members. As CIO, Kearns made sure the
board of the community health center knew his spending, at
about 2.5 percent of revenue, was below the industry average of
3 percent to 4 percent of revenue. The comparison helped him
get his basic budget numbers passed.
Don’t Forget the Polish
Even though the budget presentation can be a pro forma event,
it still has to be good. There aren’t rubber stamps in
budget discussions. When all is said and done, Ford says, he
expects he’ll be asked to spend slightly less than
he’s proposed. Closing the deal in your favor requires a
polished performance. Use these tips to shine:
Be succinct. Kearns says that since
he’s become a CEO, he realizes how focused presentations
need to be. “I have this board, and I have five times the
amount of stuff for them than we have time to do.” So
Kearns has his CIO give him a detailed presentation about the
budget, and then they talk about which things to highlight in
the 30 minutes or so allotted to the budget discussion with the
Pace yourself. Naomi Deutscher, a
presentation coach, encourages executives to speak quickly, but
adds that it’s also important to vary your pace. In
particular, she recommends pausing after a significant point
has been made, or a new topic or slide introduced.
Use slides for emphasis. Deutscher advises
that slides contain only a few lines of text—six at the
most—and that CIOs use these as talking points rather
than reading them off verbatim. Using color or bold text for
important points or statements helps get the message
Get feedback. Practice giving a budget
presentation beforehand, and, if possible, tape yourself. Then,
after the presentation, “have a colleague tell you what
worked about your content and style, and what
didn’t,” says Deutscher. “People don’t
do enough to find out what people like and get feedback on what
worked and what didn’t.”
But the annual performance is but one point in a continuous
exercise. It requires strength in numbers and months of hard
work, along with political savvy, corporate tea leaf reading
and an understanding of the company’s strategy and
IT’s role in it.
Michael Fitzgerald is a freelance writer in Millis,
Mass. He can be reached at email@example.com.