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The goal of any IT budget justification is to persuade decision-makers that they should approve and allocate funding for a project that will improve the way business is run. To ensure that your next project will do just that, it’s essential to focus on the business needs by interviewing relevant stakeholders first. Once you’ve done that, consider providing a range of options with performance measures built in.
1 Focus on Business Needs
It’s important to make business performance improvement the centerpiece of your budget. “I pitch my budget directly to the partners of the company, and they aren’t the most technically savvy,” says Josh Rosenbaum, I.S. manager at Fletcher Farr Ayotte, an architectural design firm in Portland, Ore. “It’s important to communicate in terms they understand such as this is what we’re doing, this is how it is going to help us, this is why we haven’t done it before and this is why it’s going to give us a huge quantifiable increase in productivity.” It is extremely important to define business objectives and strategic goals upfront in your budget.
2 Interview Stakeholders First
A good budget justification will explain the relationship between technology and the business outcome. In general, these objectives will come from discussions with business leaders within your organization. “Meet with business sponsors to identify the business problem that you’re trying to solve with a particular enhancement and to get their buy-in from the very beginning,” says Lizet Santo Domingo, senior project manager at Wyndham Worldwide. Implementation of technology is not a business objective in itself; it is an enabler of business objectives.
It is your job as a technologist to explain how you can achieve these business objectives better, faster or cheaper than is possible now. Make sure that you clearly state what the end result of each project will be, such as “to implement unified communications by the second quarter of next year, which will enable our sales team to increase productivity and revenue by facilitating increased customer contact.”
3 Present Options: Good, Better and Best
No one wants to buy anything without knowing what it is and when they’ll get it, and the same holds true for businesses. Use an executive summary and a few bullet points to quickly convey essential aspects of the new project in your budget. “Analogy goes a long way in explaining things,” suggest Rosenbaum. “Compare the technology in the office to a car, and make the point that each aspect of the project is like a gear, and they all need to work together.”
Also, make sure you provide options and not just one solution to the business challenge, unless of course, there is only one option.
Additionally, provide an overview of project controls, development plans, test plans, implementation plans, post-implementation evaluation plans and how you will track project progress. Decision-makers will also want to know about significant risks and how they will be prevented or mitigated.
Deliverables can be broken down into intermediate deliverables and final deliverables. Make sure your budget justification includes a discussion of the final project deliverable. Deliverables can include system requirements, system specifications, hardware acquisition and installation, the pilot project results, software installation and user training, just to name a few. Provide a timeline of deliverables.
4 Offer Cost Estimates and Performance Measures
This is the meat of the budget and it is certainly something that becomes easier over time. Many IT managers get bogged down in details, and it is unlikely that your funding authority wants to read that many details. It is usually best to structure cost estimates in such a way that decision-makers can quickly ascertain the big picture and then drill down to specific line items if they desire.
“Present the budget in the context of the business requirements, and provide solid estimates for project cost, benefits, payback period, potential additional revenue and ROI,” says Santo Domingo. “Make sure to clearly define benefits so upper management will understand why to approve it.”
Describe the project plans and schedules, the key performance indicators that you will use to monitor and track progress, the periodic meetings and reports that you will use to communicate this progress to decision-makers, and the process that you will employ to take corrective actions if needed. It may benefit you to provide a small table of key milestones and their schedule.
Quantify wherever possible; it is better to say “we will deploy 52 new Windows Vista workstations” rather than say “we will buy the sales team new computers,” and tie these purchases to achieving business objectives. “Always quantify everything that you can, whether it is expenses or benefits,” says Santo Domingo.
5 Anticipate & Address Concerns
Be prepared to discuss the budget proposal and to defend your choices. Bear in mind that the goal is to reach consensus, not to win. It’s important to address management’s concerns before the project is funded, because if concerns come up later that you cannot address, it will spell trouble. By anticipating management’s concerns in advance, you can assure them that your funded project will be a success.
“The budget proposal has to be realistic and measurable because at the end of the project upper management is going to go back to the original document and determine whether or not you’ve succeeded,” Santo Domingo warns.