The Traditional IT Budget Process Wastes Big Bucks

The annual budget process is one of a CIO's most unpleasant tasks. It's also one of the most inefficient, according to the CIO Executive Board , part of The Corporate Executive Board Co. in Arlington, Va.

The research group says the traditional annual budget circus can waste 6% to 11% of the IT budget because of squandered staff time, project disruption, missed cost-cutting opportunities and rework -- when the budget has to be ripped up and rebuilt in response to changing circumstances.

Andrew Horne, research director at the CIO Executive Board, said some CIOs are trying less time-consuming -- and more flexible -- budget approaches such as these:

  • Lean planning: A useful tool in a time of economic uncertainty , this is a lightweight, agile, top-down process that has far fewer line items and only 10% of the detail of traditional budgets.
  • Budget scenarios: This method involves envisioning multiple views of the business's future and coming up with different figures for each; the CIO then watches key business metrics, or triggers, to know when to switch from one to another.
  • Rolling budget: In this approach, the CIO updates the budget quarterly, looking ahead five quarters, and frequently consults with business leaders to make adjustments.

Copyright © 2009 IDG Communications, Inc.

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