Every successful couple eventually faces the need to take steps to balance individual priorities with joint goals in context of their short and long term objectives. In the corporate world, business units and technology organizations must strike a similar balance between the various elements of the complex, interconnected value chains that make up the company.
Given the nature of most corporate budgets, any misalignments plays itself out in the hallways and conference rooms throughout the year – destroying value in the process.
We believe that the flurry of activity around the budgeting process is an excellent time to leverage the financial imperative to drive business and IT alignment.
In our engagements we help our clients focus on the following steps to take advantage of this opportunity…
Step 1: Establish cross-departmental dialogue early
We find situations where business usually does not communicate its priorities and IT organizations make assumptions to increase capacity to meet business objectives. Instead of planning together each department relies on assumptions for their budgeting and prioritization decisions. A foundational step is to establish contacts to move from assumptions to dialogue.
Step 2: Tie ALL technology projects to individual business initiatives
Strategic IT investments only make sense in the context of specific business objectives or large scale organizational change. We have often observed that IT organizations can sometimes make illogical strategic technology investments, usually from poorly reading of business strategy. One of the great potential strengths of an IT organization should be its ability to think about the business need and respond with a portfolio of possible technical solutions that can be evaluated based on a variety of factors (e.g., time to market, cost, complexity/maintainability).
Step 3: Require business and IT to jointly present a business initiative and its supporting IT projects
In many of the companies we have dealt with, a project is either classified as a business project or an IT project. This sort of worldview presents two complex challenges. First, projects that lack joint sponsorship can very easily be perceived as another group’s problem. Such feelings lead to the second problem, proper estimation and comparison of projects requires a serious time commitment from all parties. A joint accountability between leaders of business units and technology organization is essential for ownership of IT projects.
Step 4: Have a transparent process that allows the organization to deal with changing business priorities within the fiscal year
Any evaluation of how best to deploy the organization’s project funds is only a point in time calculation designed to meet the needs of the business as they are seen at that moment. A mid-year budgeting process that allows business units and IT departments that have good ideas to compete for a pool of funds can enable a company to be more responsive to market shifts or strategic refocus. A mid-year process can either be created by budgeting a set sum during the annual process or be flexibly funded based on a key metric like company profitability for the year to date.
Path to Improvement…
Whatever condition you find your company’s annual budget process in, it is important to view the process as a continuous improvement effort. By creating the initial process and framework to support budgeting efforts across the enterprise, business and technology executives will put the company on a path to improve the dialogue; which is something every relationship can use.