O'Reilly logo

The Executive’s Guide to Information Technology, Second Edition by Carr, Nicholas G., Piot, Jon, Baschab, John

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 15. IT Budgeting and Cost Management

 

Economy does not lie in sparing money, but in spending it wisely.

 
 --Thomas Henry Huxley (1825–1895), British biologist and educator[1]
 

I will veto again and again until spending is brought under control.

 
 --Ronald Reagan, 40th U.S.President, on vetoing a bill that would have extended $2 billion in federal loan guarantees to farmers.[2]

This chapter presents a practical overview of IT budgeting and cost containment practices for the CIO. In creating the department budget, the CIO must analyze a large number of variables and balance multiple competing priorities, while devising the most cost-effective approach for delivering mission critical services. Because of the impact the budget has on the IT manager’s ability to run an effective department, budget creation is one of the most important jobs an IT manager has.

The chapter is organized in four key sections:

  1. Budget componentsKey components of the IT budget and the typical ratios of spending in each component.

  2. Budget processTwo processes for completing the annual budgets.

  3. IT cost driversAn overview of key cost drivers in the budget and strategies for reducing costs.

  4. Additional IT budget considerationsManaging capital expenditures, cost audit practices, contingencies planning, managing the budget, chargeback mechanisms, lease/buy decisions, and handling out-of-budget business unit requests.

The first section describes key components of the IT budget, such as soft-ware, hardware, labor, ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required