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An effective Budget Oversight and Performance Analysis (BOP) capability aims to:

• Improve visibility of actual IT expenditure over extended time periods.
• Better inform decisions regarding future funding levels and allocations.
• Improve the quality of future budgets, and identify favourable budget trends and areas of concern.
• Increase confidence that budget allocations can avoid unplanned adjustments midway through a financial cycle.

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.

Representative POMs are described for BOP at each level of maturity.

2Basic

• Practice

  Track IT budget performance within the current period at operations and project levels.

  Outcome

  Data begins to be accrued on actual versus planned expenditure.

  Metric

  Percentage of projects and operational activities with budget analysis reported.

• Practice

  Adjust IT budgets based on budget performance analysis.

  Outcome

  IT budgets become more realistic and transparent.

  Metric

  Percentage of projects and operational activities that meet their original and adjusted IT budget allocations.

• Practice

  Use extrapolations from historical patterns to stress-test planned IT expenditure for larger IT projects and IT budget categories.

  Outcome

  Confidence levels for budget planning can be improved by more formally leveraging past experience.

  Metric

  Percentage deviation from planned to actual expenditure by budget category and by larger projects.

• Practice

  Establish basic reporting of IT budget performance at operational and project levels.

  Outcome

  IT personnel are aware of the role that budget performance plays in meeting business objectives.

  Metric

  Percentage of relevant IT personnel who are aware of IT budget performance.

3Intermediate

• Practice

  Expand in-period tracking and trend analysis to cover most IT budget categories.

  Outcome

  Oversight and performance analysis can be performed, and it becomes easier to identify issues across broader budget categories.

  Metric

  Percentage of IT budget categories with budget metrics reported each period.

• Practice

  Facilitate IT budget analysis, with partial automation of the reporting approach.

  Outcome

  Partial automation allows for more timely budget analysis and decision-making.

  Metric

  Number of days after month end that the monthly budget analysis report is produced.

• Practice

  Report a standardized set of budget performance metrics (for example, cost per unit or earned value) for all budget categories and link them to IT targets.

  Outcome

  A standard set of metrics can be compared across budget categories, facilitating deeper analysis.

  Metric

  Percentage of budget categories with budget metrics reported. Survey of stakeholder confidence in fiscal management by the IT function conducted.

• Practice

  Use budget analysis to predict future IT expenditure for all budget categories.

  Outcome

  The inclusion of all budget categories enables more accurate scenario modelling and planning.

  Metric

  Percentage deviation from planned budget for each reporting period.

4Advanced

• Practice

  Sufficiently automate multi-year budget tracking and trending analysis.

  Outcome

  More accurate and more timely analysis is available to management across the organization.

  Metric

  Percentage of IT projects and operations activities with budget tracking and trending analysis.

• Practice

  Promote organization-wide reuse of IT budget performance analysis to inform planning on future expenditure.

  Outcome

  There are better discussions regarding organization-wide buy-in to how best to balance between run the business IT expenditure and change the business IT expenditure.

  Metric

  Year-on-year percentage change in budget allocations by category.

• Practice

  Establish regular reporting cycles to communicate IT budget performance against the organization-wide objectives — for example, via management dashboards.

  Outcome

  There is better awareness of IT expenditure patterns, which inform planning activities.

  Metric

  Percentage of the IT budget aligned with business units' objectives.

5Optimized

• Practice

  Continually review the scope of real-time gathering, analysis, and reporting of budget performance data.

  Outcome

  Management have the ability to make better informed decisions more quickly.

  Metric

  Percentage of IT projects where corrective actions lead to budget adjustments.

• Practice

  Continually use budget performance analysis to optimize unit cost management.

  Outcome

  Opportunities to optimize unit cost management decisions for improved business value are identified.

  Metric

  Percentage improvement in business value that results from unit cost adjustments.

This capability was introduced in Revision 18.10 as an update to Budget Oversight and Performance Analysis (16).

The following CCs cover topics that are related to BOP in some way:

FFFunding and Financing

Determining funding and financing for IT investments.

PPMProject Portfolio Management

Prioritizing the IT investment portfolio.

SPStrategic Planning

Establishing alignment between the IT function and the rest of the business.

TCOTotal Cost of Ownership

Monitoring budget expenditure on a day-to-day basis.