Seems like the year just started. And it did, just four months ago. But even though the year is only 4 months old, you know that pretty soon someone is going to stick his head in your office door and say something like, "Budget meeting next week. We need to work up some preliminary numbers."
And the whole thing starts over again. It's never ending. Get one done, and you get to start over again.
I've done budgets for IT organizations, test labs and editorial staffs. It doesn't make any difference what kind of organization you're working up a budget for; doing it is a royal pain. So this tip of the month will try to give you some ideas for reducing the pain to a bearable level. It won't get you all the way there, of course. That won't happen until the budget is approved. But it will help.
Moreover, you want to use the budgeting experience to help you move in the organization. It's a bit trite to say, but an IT manager who can clearly and cogently make budgeting recommendations to management, and explain them, and make the organization run better as a result of his budgeting efforts can become a real hero in the business -- and that leads to greater things.
And that manager can make life easier for his IT staff if the budget is done properly. It's in the budget that the company or organization sets its priorities for the coming year: where will it spend money, what new initiatives will it take up, what programs will it let go away. For IT, what can we do to improve, and what will we leave as is, or even let dwindle? So don't look upon budgeting as a problem; think of it as an opportunity to do something good for your company, your department, and for yourself.
Here are my five top things to do to make budgeting easier.
1. Know what you spend now
If you don't have a good idea of your spending at present, get one, and get one fast. That may not be as easy as you think. You may not know what equipment you have. Many don't, as hard as that seems to believe. You might not have an idea of how long it takes to resolve a trouble ticket. You need that information. Similarly, you should be getting reports from your company's accounting office on external spending. But if you're not, you can keep track of it yourself. As executive technology editor of TechTarget, I deal with a lot of contract writers. I can tell you what I've spent for these writers, what product they have submitted and when it was published. I handle all this with a couple spreadsheets that link to one another. Although it takes time, that time is worth it.
As I have said in previous tips, managing consists of first, observing what is going on and second, correcting things to get you to a standard. That is how you'll stay within budget now, and it's how you're going to set the budget numbers for many of your functional areas for next year. Many, but not all.
2. Don't assume things will stay the same
They never do. Right now, companies are wondering what the year will bring in terms of sales and general business activity. So your numbers could be dictated low by the powers that be. Then again, assuming that you're going to run the same infrastructure, same network hardware, same everything, could cost you money in the long run. And if the overall numbers are going to come in low, maybe you should investigate some hardware acquisitions that could save you, say, help desk personnel. As an example, Novell discusses controlling IT costs on its Web site and notes there, "The idea that 'If it ain't broke, don't fix it' often guides the decision to stay with the status quo, no matter what it costs."
This is a time of tight budgets, and it's often hard to make the case for spending for something new. But that doesn't mean you shouldn't know what's available out there, and it doesn't mean you should decide not to do something simply because of inertia.
3. Understand the business needs of your organization
Everything your company does is aimed at fulfilling that company's mission. So you must make sure your budgeting reflects the needs of the business to meet those objectives. Just as an example, you don't need to worry about setting up more Web servers if your business executes only a small percentage of its sales over the Web and doesn't plan to increase that percentage. But if, like most companies, you plan to increase that Web presence, then you need to budget for more servers, perhaps increased bandwidth and even, perhaps, the services of an integrator who can set up the hardware and integrate it with the software you will need.
4. Tailor the budget to your circumstances
Is there a glut of IT personnel in your area? Maybe you need one more tech, but you can spend a little less money than you would ordinarily because of that glut. On the other hand, do you need specific expertise? Then maybe you need to spend a bit more. Or perhaps your organization has instituted a hiring freeze, but you still need that extra hand. Then perhaps there is some way of leveraging technology to accomplish what another hand would otherwise. Maybe a relatively inexpensive add-on to your management software would allow you to be proactive rather than reactive, thus more efficient in your use of personnel resources. Your budget proposal's numbers must reflect both the internal and external factors your organization faces.
5. Know your subject -- and be able to explain it
Finally, the numbers you propose in your budget may make perfect sense to you, but you understand not only your department but the technology as well. It's likely that whoever approves your numbers will understand neither. So you must be able to explain what you want to do, what you propose, in terms that make sense for the business case. Installing a new T1 line will increase Internet bandwidth, but so what? Since you are the tech expert in this situation, you have to explain the "so what." Talk in terms of reduced time to sale if you're working with an e-business site. Improved employee productivity will mean more profit with the same number of personnel, so that new piece of software will pay for itself in a measurable period of time. Be specific, and know the numbers to make your case. Then you can explain the benefit of technology to those who are tech-challenged, which, let's face it, is most people in the country these days.
These five precepts won't mean everyone will automatically proclaim you the hero of the day, but they'll go a long way to getting you on track to prepare a budget proposal that will have a better chance of making headway in tough times.
About the author: David Gabel is executive technology editor for TechTarget.
This was first published in May 2002