We all know budgets are like buckets. Each bucket holds some money to pay for something. When we make are budgets, it’s like setting out our buckets, labeling them and getting them ready to hold some money. When the budget gets approved, we virtually put money into the buckets. So in IT, we see our money in these separate little pools, to be allocated to each predetermined expense. When you move up from IT the little buckets of money roll up into a bugger bucket of IT budget. If the higher ups view your money as one bucket, does that mean you can vary how it is spent?
This whole budget/bucket paradigm means that IT has a way it has planned to spend the money it was allocated. Some of it goes to pay for people, some to maintenance, some to cleaning the data center floor and some to capital expenses. So really in IT there are two budgets, the SG&A (Selling, General and Adminstrative) or operating costs and the capital budget, for new things that were going to get purchased. At the end of the day these are what roll up into the corporate IT budget. So when you or your boss are sitting in a meeting with the CIO who is reviewing budget variances (either over or under amounts) what they care most about is that the buckets level out where they are supposed to. So if you saved too much money somewhere, you probably should have spent it on something or else you have to explain why you are under budget.
This bucket view of things brings us back to the previous post “But it’s already paid for.” Remember there is a bucket to pay maintenance. If you lower the cost of maintenance or find a way to eliminate it, that bucket still contains money. So it’s either explain a variance or reallocate the money. Honestly, if you don’t replace the thing you are paying maintenance on, you probably won’t be eliminating the maintenance.
The issue that arises is that IT being viewed as that one big bucket from a corporate perspective means there is little visibility to how the money impacts the business. Again this is completely an issue of IT-Business alignment. To get a better understanding of what each bucket of money translates to in terms of business value, IT needs to track it at a detailed level. Chances are there is someone in IT finance, who works for the CIO who does just that. That person should probably be your new best friend. When you work together with them, instead of avoiding them (come on you know you do it!), you can strategize on ways to get the most for your buckets of cash.
No matter how you slice it, no one wants a smaller bucket year after year. So the idea is spend it, but spend it wisely, and demonstrate the value you are helping achieve.
