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How to Manage IT Budget Effectively

IT is on a daring quest to prove its worth to the business. As Pearl Zhu states in her Future of CIO blog, the only way to accomplish this mission is to strike a balance between ‘operation’ and ‘innovation,’ making the fated transformation from a cost center to a value creator.  

The Budget Quest

What by now seems like an age-old challenge is finally being met by some outfits. When other departments realize their part in the IT value quest, turning IT into a powerhouse of innovation suddenly seems workable. The companies that ‘figure it out’ first will be leaving the dinosaurs in the dust.

CIO Prove thy Financial Mettle

When each department head is given control over their own budgetary destiny, this creates a scenario where IT must prove its mettle against the other feats of fiscal strength. Add this to the looming reality that the business might decide to take IT matters into its own hands:

The 'threat' [is]that business units will procure SAAS solutions based on slick sales patter without involving IT. Organizations then inadvertently increase the overall cost of IT, creating siloes of data, disjointed strategies, and integration nightmaresThe best solution is to have IT represented at the Board, and Directors that understand the value of a strategic partnership with IT, and a CIO that can 'talk business' not just technology.

Victor and Vanquished

In the end, the Achilles heel of IT may be financial management. Has your outfit done a thorough cost/benefit analysis of legacy systems recently? Created a cost model or cost allocation model? Keep in mind, the epic quest to become a value generator and revenue center is creating winners and losers. How will your enterprise meet the challenge?

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About Eric Anderson

Eric Anderson is a staff writer for CAI's Accelerating IT Success. He is an intern at Computer Aid Inc., pursuing his master's degree in communications at Penn State University.

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