In-Depth

Growing Your IT Budget with Communication

IT organizations can take steps to increase their standing with business leaders and grow their IT budgets—but how many are actually doing so?

• By Stephen Swoyer
• 10/19/2004

These days, IT managers may feel as if they’re constantly under siege: Far from merely worrying about annual budgets concerns or securing funding for new projects, they’re under pressure to justify their very existence to skeptical business executives. Things may seem bleak, but IT organizations can take concrete steps to increase their standing with business leaders—and successfully grow their IT budgets.

There are a number of reasons why IT budgets are now subject to ever-greater scrutiny. Part of the reason, experts say, is a kind of just desserts: Call it payback for a run of years (the late 1990s) when IT had considerably more latitude.

At the same time, the role and influence of IT is a political issue in many organizations. Resentment—particularly among other business units—is bound to occur.

“There’s a breakdown with regard to the credibility of IT organizations as perceived by the rest of the business stakeholders, because the IT spending number on its own is a very conspicuous in the business,” says Patty Azzarello, CEO of business service management specialist Euclid Inc. “If you look at the overall financial plan for the business, a lot of times the IT spending" figure sticks out. "Everybody is just staring at this very conspicuous IT budget number, and no one understands it.”

Euclid, of course, has a dog in the fight: It markets software that’s designed to help companies align IT with their business goals. More often than not, Azzarello acknowledges, CIOs and other IT leaders invest in Euclid’s software in order to provide tangible proof—in the form of reports, dashboard views, and other metrics—of IT’s impact on the bottom-line. Even so, she argues, there are a number of steps IT leaders can and should take to improve their standing with IT leaders.

“Historically, IT organizations have not been very good in explaining their spending, and explaining it in a way that the business stakeholders can understand how the value and the ROI should be measured.”

One way in which IT organizations can do this is by exploiting a common means of interaction with business decision-makers—the IT advisory council—to market themselves to business leaders.

To a large degree, of course, this involves explaining just how IT expenditures map to business success. The problem, according to many of the IT professionals we spoke with, is that few are doing so.

Take Bob Richards, a mainframe professional with a prominent national financial institution. Richards says he isn’t aware of any such outreach efforts on the part of his IT organization. Business still effectively does what it does even as IT is expected to perform its black magic. “I do assume that the CIO has to explain some things to the Executive Management Committee here, but I'm not sure if I would characterize it as specifically as … oversight unless the expenditure is over seven or eight figures.”

Ditto for Stephan Bren, an MCSD with a global solutions provider that has notched contracts with a large number of government organizations. To his knowledge, no such outreach efforts are underway in his organization. “Funding for such infrastructure for us is on an as-needed basis, so long as it falls within the contractual budget,” he says. “In my experience, funding for such is made by line management. Indirect support for IT, such as general network support, etc., may be subject to such scrutiny, but this is outside of my knowledge area.”

On the other hand, David Goebel, a software developer with the California Unemployment Insurance Appeals Board (CUIAB), says his organization has made outreach efforts of this kind.

“We do, in fact, have a committee called the IT Steering Committee which was formed last year. This committee resides under another branch of our organization." The only problem, says Goebel, is that his organization’s IT steering committee was missing an important perspective—that of IT: “ At initial build, this committee did not include any IT team members.”

Since then, he says, CUIAB has added at least one IT representative to its IT steering committee. “Currently the IT Steering Committee has six members; one of them is now from IT,” he says. “The committee's purpose is "to prioritize our IT investments and ensure new technology is deployed in a manner that is consistent with our business needs and goals.”

Euclid’s Azzarello acknowledges that in many cases the business committees nominally tasked with overseeing IT operations are bereft of IT representation. All the more reason, she says, for IT to focus on enhancing its relationship with business leaders. “In the past, my personal experience at board meetings and executive staff meetings throughout my career has been that there were never any IT people in the room. This problem really is up to the CIO himself to solve, to develop leadership and accountability and communication with business leaders.”

In some cases—particularly, it seems, in companies that are themselves purveyors of IT solutions or services—CIOs don’t have quite so difficult a row to hoe. Take Seattle-based systems integrator Avanade Inc. for example.

“We have much more accountability and transparency into the projects that we undertake at IT because the CEO is very conscious of all of the projects we’re working on,” says Craig Nelson, director of IT infrastructure and operations. Nelson acknowledges that in previous IT jobs “there wasn’t as much of an emphasis on things like program management as there is here.”

Why are things different at Avanade? Nelson acknowledges it probably has something to do with the fact that his company (a purveyor of IT solutions and services) takes the value of IT more or less for granted. “Our company sells IT services, so everyone has a fairly good idea of how important IT is,” he notes. “Our leadership is fairly well-versed in how the sausage is made and the importance of it as well.”