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IT Budgeting
This chapter presents a practical overview of IT budgeting and cost
containment practices for the IT director. In creating the department budget,
the IT director must analyze a large number of variables and balance multiple
competing priorities, while devising the most cost-effective approach for delivering
mission critical services.
IT budget composed of 6 key components
Hardware
Software
Employees
External service providers
Data and communications
Others(All miscellaneous spending )
Preparations for Budgeting
collect inadvance the list below to help
streamline and improve the accuracy of budgeting:
the Actual operating, capital, and budget
variance figures from the previous year
Any changes to company operating policies
Estimation of current peer spending
There are two different approaches to building the budget:
1. Zero-based budgeting 2. Run-rate budgeting
Things to remember while performing the Budgeting
Develop baseline infrastructure costs as outlined previously.
Attempt produce this baseline on a continual basis.
For each baseline budget line item ask, “Will reducing this number
cause any change to business service?” If the answer is no, the cost should probably
be cut. A large driver of cost reduction is standardization of the environment.
Work only on the projects that the department can complete in time so that there is no need for recalsulation of the budgets
required.
Develop a review process to critically assess current projects.
Each project should receive a status flag of green, yellow, or red.
This review will ensure that overbudget projects are dealt with before
they greatly impact the overall budgets.
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