Some tips on great budgeting that businesses will love. Start of November every year, most of the companies embark on their annual budgeting exercise. While very few consider increasing the expenditure, most of them are all about cutting their cost and expenses. Being a part of the annual budgeting in a few large companies globally and playing a key role, I learned a few lessons that can be invaluable to the budgeting team of the CIO.
CIOs are expected to cut their expenditure and improve their outcomes every year. While this seems out of place, the fact remains that it happens almost in every company that I have come across. The increase of budget happens only in one case; when a business is ready to sponsor a project that the CIO can make it happen. However, it is not generally the case that happens on the ground. With changing times and technology becoming more federal, enthusiastic business leaders no more hide their desire to control the technology element that has now become critical to their business success. It is now mostly the business leaders who initiate the technology spend and want to control the project. I have seen shadow IT groups
Almost everywhere as part of business teams and they are only growing. Role of the CIO, therefore, has come under strain over many years. Therefore the CIO and his budgeting team take to the CFO is always about ‘Keeping the lights on’.
CIOs, therefore, should budget to show their intent of leading from the front by learning, innovating and educating business leaders on how they can deliver better outcomes through technology. Instead of keeping a high level of budget on ‘Lights on’ they should try to reduce the cost of their own budget of ‘Lights on’ using either innovating technologies or reducing the cost through off-shore captives. The saved money should be then used for doing as many meaningful POCs and new development that would help business in their growth.
Reduction of Light’s on from existing average 70% should be reduced to 35% by the CIO in order to be relevant in the fast-changing technology dynamics. Increasing demands on trying new things (POCs), testing the validity of new technologies in the business and taking an increasing amount of new projects obviously will have to be done by reducing the cost of ‘Lights On’ IT spend.
I have spoken to several IT and business leaders on how they can reduce the expenditure on their Light’s on operations that can enable them to use the saved money. Most of them have already outsourced or have an offshore presence. They seem helpless in reducing the cost further significantly. When I speak to them about the ‘Trust Business Model’ that our venture ScrumStart has implemented, they find immense opportunity in reducing their costs by an average of 30% and at the same time see opportunities in doing many more things like R&D and POCs at far lower cost than they had budgeted earlier.
Budgeting is no more a financial exercise for the CIO. It is an outcome of their experiments and POCs happened earlier that can showcase tremendous opportunities for the next year and ScrumStart can help them do that effectively.