IT budget planning process explained: What IT leaders need to know

Successfully designing and completing an IT budget planning process is often tricky. Depending on a businesses' preparation, the outcome can range from a well-thought-out IT strategy and valuable roadmap to an unsuccessful annual exercise in futility. This process might also seem daunting to new IT executives who are inexperienced with financial statistics and budgeting concepts.

Fortunately, we've put together this guide to help businesses not only survive this exercise but also use budgeting as a strategic tool. This tool can drive their priorities and more clearly communicate expense allocations.

What is IT budgeting?

IT budgeting is the practice of divvying up available cash to different IT-related programs.  These allocations can include ongoing hardware rentals, staff hires, and one-time expenses for single projects. Some businesses budget on an annual basis, while others may require budgets for each venture as it occurs.

Why is IT budgeting important?

When properly prepared, an IT budget can assist leaders in using the budgeting process to facilitate communication and planning. The budget serves as the foundation for the company's operations. It provides the resources required for year-round planning.

IT budget planning process

There is much to contemplate when planning an IT budget. Everything from the initial considerations to meticulously following the necessary steps to choosing the correct software is crucial to the overall strategy.

Let’s take a look at each of those components.

Initial considerations

• Keep a close eye on the budget calendar. Knowing when money is due is an essential part of budgeting and helps companies meet deadlines and properly dedicate the necessary funds.
• Examine previous budgets. Businesses can learn about past expenditure successes and failures by reviewing previous budgets. IT departments must justify their spending to receive sign-off, and referring to earlier, similar projects that proved strategic and successful can help make the case.
• Make a strategic plan. The budget should reflect the department's objectives as well as the organization's broader long-term IT strategy. Anticipating priorities for the following year can help organizations determine where to spend money today or reserve for subsequent initiatives.
• Recognize the various types and categories. IT budgets are sometimes grouped as a single large item even though it consists of several smaller projects. Identifying the type and class of individual initiatives within the budget can improve decision-making and general planning.

 Suggested next steps

• Set priorities and gather support. Businesses have needs and wants, and it is essential to distinguish between the two and put priorities in the proper order. Otherwise, organizations risk approving and applying funds towards non-essential projects and overlooking necessary initiatives.
• Align expenses with goals. Aligning budget items with specific business objectives is an effective method for demonstrating strategic value to decision-makers. IT departments should clearly and concisely identify what business needs each item addresses and who will benefit from meeting that need.
• Prepare for surprises. Sudden and unexpected costs can hinder large projects. Organizations should evaluate the expected price of each item from every possible vantage point and anticipate (to the best of their ability) conceivable additional charges.
• Conduct vendor research. IT departments might consider contacting vendors for additional information before approaching management to propose a given project. The intent is not to cut corners or go over a decision maker's head but rather an opportunity to study the benefits and drawbacks of doing business with different vendors. This information can help management make better decisions.

ServiceNow Financial Planning

The manual processing of large data quantities can make budgeting challenging, redundant, and error-prone, resulting in potentially faulty results and minimal transparency.

However, Financial Planning from ServiceNow can assist organizations in overcoming these challenges by offering transparency into budget composition and centralizing all budget planning operations. With this comprehensive module, users may construct budget plans, objectives, forecast plans, and import budget data from other sources.

Financial Planning makes budgeting easier by allowing different departments to use various budget models simultaneously. These models are very user-friendly, and managers can track actual spending and guarantee budget conformance in addition to digitizing budget data.

ServiceNow Financial Management

Explicit and clear assigning of expenses to different IT accounts is crucial to improving the respective costs per project visibility.

ServiceNow's Financial Management workbench enables financial administrators to allocate these costs and promote efficient workflow through a series of stages:

• Before allocating expenses, the initial 'Data definition' stage sets up the program.
• Using the 'Chart of Accounts,' you can change the hierarchy and segment definitions.
• The 'Data Cleansing' stage then eliminates unnecessary financial charges.
• In the 'Bucketing' stage, divide expenses into groups.
• The 'Allocation Setup' stage allows you to designate expenses to segments and accounts.
• The final 'Review' stage performs the last review before processing.

ServiceNow Financial Charging

Generating comprehensive financial reports based on accurate service consumption charges is complex. However, Financial Planning from ServiceNow simplifies this process by helping analysts compute financial expenses and identify to what divisions the business should designate those costs. This exercise gives stakeholders significant visibility into the organization's economic consumption, improving IT investment decisions.

Cask and ServiceNow have the right software to meet your budgeting needs

Creating a budget is a daunting task, yet it is vital to running a successful organization. The process often requires implementing budgeting software that can track development, set spending limits, and ultimately help you run your firm more efficiently.

Request a quote today and learn how Cask's ServiceNow IT budget planning services can help you allocate expenses efficiently and make better financial decisions.