Some CIOs always seem to be plush with funds and have great IT Budgets. This article looks at some critical factors which influence IT Budgets.
Year on year most CIOs are facing a downward pressure on their IT spends. IT surveys in last year and year before have shown that IT spends either remained the same or increased only marginally. Even the marginal increase mainly is attributed to increasing man power costs and costs of maintenance. However some CIOs always seem to be plush with funds and have great IT Budgets. Most others who do not fall in this category attribute it to organisation’s culture (IT savy), or great boards, amazing sponsors and many other things – other than the CIOs ability to obtain the budgets. However obtaining Great IT Budgets is a skill. This article presents a few principles on how to get approvals for great budgets. (Here we take into consideration only budgets approved during normal operations of the company. In special cases such during Fund Raising, IPO, M&A – getting budgets is a different ball game).
I do not like to oversimplify things. However two important principles which lead to great IT budgets are great projects and great selling.
Ask any CIO and he would have at least 3 to 4 large IT projects running in parallel (and possibly on miserably low budgets). The primary reason for the low budgets is that most projects which are selected and presented to the board (or committee etc.) don’t fit the requirements of strategic projects. If you look at the IT project classification grid – where does most of your IT Budget go? Most CIOs spenGrid2d maximum amount of budgets on “support” projects (mainly because these are critical for sustaining present operations), and on “factory” projects – projects which improve efficiencies. While these two types of projects are important – these will continually face a downward pressure on budgets as these are seen as ‘necessary evil’ rather than value adding activities. Great projects are the ones which fall in the category of “Turn around” and “Strategic”. These projects hold a promise of improvement in revenue – top line and bottom lines and becoming a great differentiator spiralling companies growth.
Indentifying Strategic Projects involves number of techniques – including innovation techniques such as Systematic Inventive Thinking (which I am great admirer of), brain storming, Deep Diving, strategic workshops, etc. I will dwell into some of these topics in some of my other posts. However one thing is sure that strategic projects can rarely be identified by looking at what competition is doing.
For any CIO, it is essential to first assess where his projects lie in the above strategic grid. Once he is sure that he has a great new project which is a strategic or a turnaround project, it’s time to move on to the next step – selling the project.
Most CIOs / CTOs require the approval of some committee, board, or sometimes a person for their IT Budgets. It is not enough to have a great project (or line up of projects) to obtain budgets. Many times the most promising projects are shelved because lack of budgets. What the CIOs generally ignore is that however great the idea – it needs to be sold. Here I give four simple rules by which you can sell your project effectively to your board.
1. TALK BUSINESS: Start with how the project is going to improve revenues and efficiencies. Present NUMBERS. Do not go through the usual rant of business requirements, approach, specifications approach etc. No one is interested in these. Talk MONEY, talk about CUSTOMER, talk DIFFERNTIATION. Do not talk specifications.
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