When a client’s CFO requested figures to help plan a tech budget for the next year, consultant and TechRepublic member Richard Abel created this Excel budget workbook tool that many CIOs, especially those working in small to midsize tech shops, will find useful for mapping out tech expenditures. Abel is owner/president of Compu-Abel, a Narragansett, RI, consulting firm.

The first task Abel tackled in creating the workbook was a systems analysis of the strategic goals for the company, which included both personnel and systems requirements. The consultant broke down system needs into three categories:

  • Software Licensing—This data includes the number of licenses needed to expand the company, which is based on growth projections.
  • IS Hardware—The hardware upgrades are based on the company’s new software and personnel growth projections.
  • New Application Servers—This data is based on the fact that the client’s systems aren’t adequate to meet the company’s goals, and the server farm isn’t set up properly.

Abel also included a budget submission form in the workbook.

“Here, I take the results of the three worksheets and I can then do any type of formatting I want without disturbing the main worksheets,” he explained.

The final workbook can then serve as a guideline for an IT department’s budget, said Abel. The one missing piece, he noted, is that it doesn’t include personnel salaries. Because that information is confidential, Abel detailed those figures under separate cover, and they are not part of the worksheet template provided.

The consultant said the worksheet has been a good tool to quickly analyze costs. “It also helps me to do ‘what if’ scenarios to determine what the overhead costs will be for the department,” added the IT consultant, whose projects have included operations, IT management, system strategy development, disaster recovery/business continuity, and project management.

The individual workbook spreadsheets can be changed and customized according to different enterprise needs and financial reporting requirements.

Since creating his initial workbook spreadsheet, he has changed the individual spreadsheets (Software Licensing, IS Hardware, and Server Upgrade), which are based on the annual requirements and forecasts, by adding columns that allow him to keep track of the actual expenditures.

“By adding these columns, I have a reporting tool at the end of the year to show over and under budget amounts,” he explained.

In some cases, when he needs to include nonbudgeted items, he adds new lines to the original budget. These line items show as $0.00 in the budget area and therefore show as budget overages at the end of the year.

“When I am finished with the process, I file each workbook with the project name or annual budget name, for example, Firewall.xls or 2002budget.xls. This allows me to keep track of the budgets for the projects or the annual budget,” he said.

He has also found the worksheet handy when budgeting special projects.

“This tool helps me ensure that I don’t forget any special items that may be required by the project. It also gives the executive and project committees a planned dollar amount that may be required to complete the project.”

Tips and concerns about budgets
As a project management consultant, Abel said he realizes that costs and budgets involve allocating project cost estimates to individual work items to provide a cost baseline.

“In today’s economic climate, I know I must ensure that these amounts are allocated to appropriate budgets and prospective projects,” he explained.

That means taking into consideration the project cost controls that are in place and making sure the budget is designed to help the client get through risky innovation IT projects and protect those precious dollars budgeted for the projects.

“We must also ensure that our projects will leverage our position when the markets rebound, because those of us who have been able to innovate and keep our systems up to date all along will be ahead of those who haven’t,” Abel said.