Your IT department’s budget can give some insight into your organization’s vision for its future. Does a larger budget mean the organization cares more about innovation and digital transformation? Does a lower budget mean the opposite? The budget is a reflection of how much the company values information technology, but there are more aspects to consider than simply the IT budget. IT can use their tools to bring more innovation and efficiency in operational activities.
Here are six budgeting tips that should be more common amongst IT departments to yield superb budgeting results for CIOs.
- Start to compare
First, find out how much companies comparable to yours spend on their IT budget. Consider their size, industry, and level of innovation, these may be factors. Once you have an understanding of the external benchmarks, create internal benchmarks by looking at previous budgets and deciding what the minimum is and where there can be room for improvement. If previous years did not have the impact you anticipated, then consider raising the budget in certain areas or relocating funds from lackluster projects to projects with greater potential.
- Leverage capex, opex accounting rules
It’s no longer easy separating capital spending from the regular operating budget. This had blurred while IT’s mission went from maintaining infrastructure to delivering technology that benefits strategic activities. Many experts say more of the IT spending can go under capex. This can help by delaying the realization of the expenditures, which is attractive to stakeholders.
- Switch spending tactics
International Data Corp. finds that line-of-business technology spending will approximate to the IT organization by 2020. CIOs should encourage these lines of business to put more of their technology spending under their own budgets. Business executives who consider IT spending as part of their own budgets have an increased incentive to ensure the investments pay off.
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