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IT spend has increased significantly over the last decade and business leaders everywhere fear they may be spending too much on ‘unnecessary technology’, but often not enough on what is really important to the business.
This is according to Mark Geschke, CEO of Xuviate, a company facilitating digital transformation in SMEs.
The IT budget has become the battlefield for making good decisions and appropriately allocating funds, but unfortunately most of the attention is focused on the budgeting process itself, he says. Not enough time is spent on the important business technology management (BTM) competencies that lead to a good, carefully-considered budget.
“In total, we have identified 15 BTM competencies that need to be mastered. Acquiring or improving BTM competencies is a sequential, step-by-step process and each step improves the capacity to make better technology decisions and ultimately, get more business value from IT,” he explains.
Since the IT budget is an outcome of Operational Planning, which is BTM competency 12 in this model, it is critical to understand how gaps in preceding competencies can adversely affect its quality.
Consider the following, how well can the IT budget really support the business:
* If the leaders of the business don’t agree on the expectations of information technology (BTM competency 2);
* If information technology is not considered a critical business capability (BTM competency 3);
* If the IT leadership team is not empowered and trusted by the business (BTM competency 5) or;
* If IT and business leaders do not know how to ‘get on the same page’ to make decisions that have a long-term impact (BTM competency 7).
The answer is ‘not well at all’ and the same can be said for the other seven BTM competencies.
Geschke says there are three stages of IT budget preparation. “Depending on how far along you are in your financial year, you can be in one of three distinct IT budget preparation stages.”
The Results stage includes BTM competencies 13-15 and lasts between three and nine months from the start of the new financial year. Its purpose is to ensure one delivers as best as possible on expectations created during the previous budget cycle.
“Keeping all business IT stakeholders happy and confident in our ability to deliver will be very important for creating the necessary goodwill to implement some of the critical changes recommended during the next stage,” he says.
The next stage, which is the Foundation stage, can last anywhere between a few weeks and many months, with the expectation of it requiring less time every year. It includes BTM competencies 1-9 and focuses on creating a solid foundation and favourable conditions for an effective Planning stage.
IT leaders, who are usually quite action-orientated, incidentally also experience this stage as the most difficult one, as the results of their efforts are not immediately apparent and require some perseverance to push through.
“A common mistake made by many IT leaders is to skip this stage entirely and immediately proceed to the final stage of budget preparation,” he warns.
The third and last stage is called Planning and is synchronised with the business’s annual strategy and business planning process. During this stage, IT enters the final phase of its budget preparation and now focuses on BTM competencies 10-12 – which includes the actual preparation of the IT Budget.
“To ensure you spend your limited time in the most effective way you need to prepare your approach. To help you do this, Xuviate has developed a completely free and simple-to-use Excel-based?BTM Planner companion tool that should go a long way towards getting you started,” he concludes.