Right Approach to BudgetingBy Kim S. Nash | Posted 2007-02-07 Print
Bigger technology budgets, plus savings from cutting infrastructure costs, mean CIOs have more money this year to make their mark.
Right Approach to Budgeting
Aside from freeing up money in the existing information-technology budget, there's another way to make sure your favorite projects get funded: ask the right way.
Show how whatever it is you have in mind does something concrete to improve the company, either by making it more competitive, improving the internal flow of information or bolstering product quality, says Skaistis, the eGlobal CIO consultant.
"It's incumbent on the CIO to be the leader, as opposed to being reactionary and waiting for business to say, 'We want one of those,'" he points out.
How a technology executive presents ideas can determine whether budget requests get approved or denied, adds Scott Holland, who leads the information-technology practice at The Hackett Group, a consulting firm in Atlanta.
Rate all technology proposals by the degree to which they address core infrastructure maintenance, help the company keep up with growth or transform a major process, Holland suggests. Even more effective, he says, is tailoring your proposal to one of the chief executive's critical interests. "Tell him how you can invest in I.T. to lower sales, general and administrative costs," he says.
More specifically, find technological ways to cut costs in finance, human resources and procurement, which are among the biggest drivers of sales, general and administrative expenses. Companies classified as "world class" by The Hackett Group, meaning they rank in the top quartile in hundreds of efficiency and effectiveness metrics, spend 7% more on technology than their peers. But their financial processing costs, for example, are 45% lower, according to studies by Hackett.
"Organizations close the books faster with I.T., not with more people," Holland explains. CIOs make a grave mistake when they position their department in isolation, as a line item in the overall corporate budget, he says: "Put those systems in place to automate, simplify, integrate. But show how technology makes business visions real."
Fluor CIO Barnard agrees. When asked how he was able to cut technology spending while supporting a company that's in the process of doubling its revenue in four years, Barnard says, "What, besides knowing what we're doing?"
Mel Duvall contributed to this article.
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