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Preparing for the budget battle: Winning strategies for CIOs

Find out how many CIOs fight the budget battle and win.

CIOs at organizations of all sizes are prepared to go into budget battle -- competing for precious few dollars...

to fund routine IT needs and hopefully some innovative initiatives. Even while the predictions for IT spending look promising for the next year, overall available funding is going to be tight, as revenue falls victim to the whims of an uncertain and unstable economy.

CIOs need to be on the top of their negotiating game to make certain that the dollars they need to keep technology working for the company are available -- today and in the longer term. In this fiscally prudent environment, CIOs know that every new initiative must be cost-justified through a rigorous ROI analysis. Once a CIO determines that a project makes good business sense, making the case in financial terms, with internal and external competitive awareness, will ensure victory in the budget review battle.

Here's how to speak the language of the CFO and make the case for new spending, both in terms of what it will deliver to improve everyday operations and to meet the organization's strategic objectives for the coming year:

Tie the impact of any IT project to overall corporate performance. Every initiative has an impact on the corporate financials, whether it drives bottom line, lowers operating costs, improves efficiency, increases customer satisfaction or meets a legal compliance. Quantifying IT value in financial terms or with key performance indicators demonstrates that the CIO sees both the trees -- and the forest.
Benchmark internal spending plans against the competition. Knowing what industry peers are spending, and with what returns, is perhaps the most powerful tool for making the case for an IT investment -- especially setting sights on the competitor who is considered to be best-in-class. A recent study from the industry research firm, Gartner Inc., linked IT spending directly to profits, concluding that companies that spend above the average amount on IT can make up to 36 percent more in profits than those who spend under the average.
Monitor, measure, adjust and report back. Understanding and communicating the business value that IT brings to the equation is a critical first step to getting necessary financial support. Once the investment is made, the real work begins. Tracking a project and its ability to deliver as promised brings accountability and provides an opportunity for adjustment.

CIOs who learn how to draw a direct line between investment and business value will build trust with the CFO, paving the way for future 'green lights' on IT investments, and ensure that information technology makes the right impact on the company's performance.

Tom Pisello is the president and CEO of Orlando-based Alinean, helping CIOs, consultants and vendors assess and articulate the value of IT investments. He can be reached attpisello@alinean.com.

This was last published in February 2003

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