As we start 2020, it’s usually a time for business leaders to turn attention to planning, budgeting and forecasting (PBF) overall updating business strategy. Today’s digital world, IT planning and budgeting is becoming much more complex than ever before — and also more important than ever before.
As organizations move towards automation and becoming more digital, the IT department have a bigger role to fill. This might mean planning in advance for asset life cycles, network changes, new cloud technology investments, and increased software training. In short, the IT planning that used to work might not cut it anymore.
Top 3 Items to Help you during budget planning for IT Department
Review 2019 – Hard & Soft Cost
Understanding cost of previous year will always provide a starting point even though technology cost varies based on multiple factors such as assets life cycles and change in business requirements. And very commonly known hard cost of IT department can be easily calculated however calculating soft cost could be complex without IT process.
The first hurdle is to understand that soft costs are real. Being inefficient and unproductive has a cost. Sometimes it’s the result of the employee not having the capabilities to perform the job, but in a large number of cases it’s because the company’s operations, business approach, management and workflow are outdated and antiquated. It’s how the company conducts business that raises its soft costs.
Measure, Benchmark and Control Soft Cost
Every organization operate business their unique way and have different operational requirements with unique challenges, however benchmarks and bulk par cost numbers provides understanding on IT investment and results compare to other similar organizations by industry type, size or location i.e competition, suppliers, vendors, and customers. While organizations use quality data to develop their budgets and forecast, benchmark data will provide understanding on competitive market position and enable organization to capture technology cost into their product and services. Business leaders should not only focus on hard cost but more importantly business results i.e return on investment in terms of controlling soft cost and revenue opportunities.
Implement Process of Real-Time Forecasting and Budgeting – Scenario Planning
Two constant changes in modern economy are business requirements and technology. All budgets, forecasts and planning become obsolete by the time people finish finalizing their reports. Many organizations are moving into a world of continuous forecasting – real-time forecasting – which provides the opportunity to take interventions earlier if there’s a gap to meet the budget. If the forecast exceeds expectations, you might reconsider what needs to change in the IT process to deliver that better outcome or re-align technology with business expectations. To achieve continuous forecasting, organizations required on-going mature and proven IT Process and Strategy to capture all business requirements and scenario planning to manage business risks.
Recent study by KPMG shows that 77% of respondents believe that planning. Budgeting and forecasting process must be a partnership-based approach driven jointly by the business and finance that takes into account enterprise-wide risks.
“Top budget priorities for 2020 by technology leaders are resource efficiency, data analytics and automation” Roberto Torres at CIO
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