Managing the IT Budget
There are many challenges associated with managing the IT budget, including, for example, unplanned cost escalation, the cost of maintaining legacy systems, and management reluctance to invest strategically in new technologies. The Managing the IT Budget macro-capability looks at the practices and tools that can be used to establish and control a sustainable economic funding model for IT services and solutions.
Critical Capabilities
- BGMBudget Management
The Budget Management (BGM) capability is the ability to oversee and adjust the IT budget to ensure that it is spent effectively. The Budget Management (BGM) capability covers:
- Planning the IT budget.
- Tracking actual expenditure and variances from the budget.
- Establishing budget accountability, oversight structures, and decision rights.
- Predicting future expenditure and out-of-tolerance variances.
- BOPBudget Oversight and Performance Analysis
The Budget Oversight and Performance Analysis (BOP) capability is the ability to compare actual IT expenditure against budgeted IT expenditure over extended time periods. Where appropriate, it offers management the opportunity to reprofile or reprioritize budget forecasts and allocations. The Budget Oversight and Performance Analysis (BOP) capability covers:
- Developing approaches and tools for budget performance analysis.
- Performing multi-year tracking and trend analysis of expenditure patterns in IT projects and IT budget categories.
- Reviewing IT budget plans versus actual expenditure.
- Providing a stimulus for rebalancing and reprioritizing budgets.
- Forecasting future IT funding levels, allocation requirements, and prices for IT services.
- Determining the impact of historical budget performance on future budget planning and on general cost management.
- Communicating IT budget performance metrics to key stakeholders.
- FFFunding and Financing
The Funding and Financing (FF) capability is the ability to determine the funding level required for IT and to allocate it appropriately. The Funding and Financing (FF) capability covers:
- Setting the overall levels of IT funding.
- Establishing leadership understanding regarding issues and options for IT funding and financing.
- Establishing funding and financing governance structures and decision-making processes.
- Allocating IT funds to broad categories of IT activities – for example, for capital and operational expenditure.
- PPPPortfolio Planning and Prioritization
The Portfolio Planning and Prioritization (PPP) capability is the ability to select, prioritize, approve, and terminate programmes and projects that are seeking organizational resources. The Portfolio Planning and Prioritization (PPP) capability covers:
- Establishing a framework for selecting and prioritizing programmes and projects.
- Involving key personnel in selecting programmes and projects.
- Assessing and prioritizing programmes and projects based on their alignment with business objectives and operational needs.
- Approving and terminating programmes and projects.
- Maintaining oversight of financial, people, and technical resources for portfolio resource planning purposes.