As an IT manager, I have a pretty good record for getting my budgets approved. In fact, unless there are extenuating circumstances, like an organization-wide financial crisis, they are always approved. Do I have a crystal ball? A magic spreadsheet? Of course not. But I do follow a pretty reliable set of guidelines.
1. Write a five-year plan and update it annually
Base your budget on a plan that rationalizes the numbers and looks forward to the future. There’s a context with those numbers—share it. Of course, in this industry, we don't really know what's going to happen in five years, but it’s important to have goals. As the forecasts get closer to the year being budgeted, technologies and budgets will come into sharper focus. Include a budget forecast section that you revise annually. This forecast will help management allocate resources over a longer planning period.
2. Know what you need vs. what you would like to have
Include in your budget at least a bit of what you'd like to have but that you don’t consider necessary. Lay it out in terms of what the extras will buy—for instance, increased productivity, better information, or faster information. Don’t expect to get it all. Draw a distinct line between what you believe is absolutely necessary and what you think will be helpful. Then, be quite direct about the risks and negative consequences of not giving you what is required to get the job done.
For instance, moving to wireless would allow your laptop users to stay connected as they move from meeting to meeting. While the wireless investment on top of your huge wired inventory might make management shy away, they may be willing to make the allocation once you describe the benefits of full-time connectivity and its associated productivity increases. As another example, you might request additional bandwidth in response to customer complaints about Web site delays. Since the Web site is an increasingly critical component in getting your organization’s message out, be firm in your request for the allocation.
3. Include a budget review
It's important to relate how you used the money you asked for last time around. Doing so gives management the idea that you know what you’re doing (you do know what you’re doing, right?). My budgets almost never work as expected, often for reasons beyond my control, such as when a sudden and unexpected shift in technologies renders a project obsolete. Including a history with the current requests gives me a chance to explain why certain things didn't work last time.
4. Divide the budget into projects, infrastructure, and operational expenses
Operational expenses are the day-to-day expenses for maintaining the current infrastructure. Be sure to present operational expenses separate from the rest of the budget—and definitely list them as a necessity.
Projects and infrastructure, meanwhile, are the “value-added” component of your department. Projects and infrastructure are your department’s contribution to the overall goals and objectives of the organization. At my organization we divide them into projects, which add value to a specific department, and infrastructure, which benefits the whole organization. The spreadsheet in Figure A demonstrates the breakdown.
5. Research costs carefully
When creating my budgets, I always conduct careful line-item research on projected purchases of equipment, software, and services. Include prices as they stand unless you’re positive that a new development will reduce the price significantly. Then, during the year, increase the value by buying at a higher technology level or increasing the number of items purchased rather than leaving a large surplus at the end of the year.
6. Hit your targets
Nobody's going to complain if you are plus or minus 10 percent (well, they might if you’re plus 10 percent). If significant and unexpected price/technology changes happen—for instance, if the price of RAM doubles or halves—document these changes thoroughly and explain them in your budget review. Budgets are designed to present the possibilities, and nobody has a crystal ball. Careful planning will help you to hit your numbers. Management will gain confidence in you if you can demonstrate consistent performance.
7. Include tutorials in your plan
Management may not understand why you need to upgrade to Layer 3 switches throughout the network. Provide enough information to give them a sense of the capabilities they are buying by including a short and basic paragraph about the business advantages. Then, they'll feel empowered to make the decision to fund it. Diagrams and charts help make difficult concepts concrete. Above all, make it short and sweet. Managers have too much on their plates to hear the full history of the switch change and the impact it will have on the organization.
8. Write the plan
Start with a review of the past year. Then present your goals (a single statement of purpose) and objectives (specifics needed to reach each of the goals). Present your updated five-year forecast. Describe details of the plan with a discussion of tasks, timelines, and required resources in a project detail section. Finally, include an itemized cost section. Management will be able to communicate the things they consider important in your next year’s plan by either suggesting projects you hadn't considered or (unfortunately) slashing projects that may be close to your heart.
Sample budget outline
1. Review of past year: Highlight your successes and changes to last year’s plan.
2. Goals and objectives: Give a succinct overview of the basis for your plan.
3. Forecast: Make a rolling five-year forecast of your plans, including costs, in bullets.
4. Plan details: Outline key operational areas and specific projects.
5. Costs: Give realistic costs for each project and operational expenses.
With these methods and a year or two of practice, you’ll be able to get the financial resources you need to do your job. You’ll also earn the reputation as someone who communicates well—a bonus that will make both you and management happy.