Let me start by wishing everyone a very happy and prosperous 2010.  If you are here now, it means you survived the holidays and the new years eve parties and are probably sitting back at your desk for the first time in at least a few days.  Maybe you have your new budget or maybe you don’t.  Either way you have a job to do and you’re hoping some factoid or tidbit in this post will help you do it better.  I appreciate your tenacity and quest for self improvement and I want to help.  So my contribution to your new year is this:

For the next several days (maybe weeks) we are going to work on building a great financial model to help us understand what our existing costs really are.  Each day we will add a new cost to our model and I will explain how to figure out what your expense for that cost is.  When we are done with the initial model you will have a foundation you can build on, or an input that you can import into a real financial management package.

The tools you will need to complete the financial model:

1. A spreadsheet program (Microsoft Excel, OpenOffice/StarOffice calc, Google Docs, etc…)

2. Basic knowledge of how to use said spreadsheet program.

3. Information about what you spend…  The more accurate the information the better.

4. Some time…  Each day will probably take about an hour to complete.

5. Patience!  This is a process and takes some getting used to, but in small chunks it should be pretty painless.

That’s it!  Given the availability of spreadsheet programs that will do what we need, the only cost involved is your time.   I will make every attempt to fill the posts with screen shots, formulas and sample information.

This will be a simple model that shows an accurate representation of your expenses as they stand today.  The more advanced packages in the market (like the one I normally use) let you model those costs over a long period of time, do analysis, generate many types of reports and guarantee GAAP compliance.  If you are serious about getting a handle on your IT spending and budgeting, I suggest you use this as an import and go with a more robust tool.

With that disclaimer aside, let’s get down to business.  Today we will set up the framework for our IT General Ledger.

So please open a new spreadsheet and set it up with columns like the screen shot below.  For consistency if you use the same column names that I have, it will make it easier for us to track together and me to answer your questions.

Once the spreadsheet basics are set up save it.  Tomorrow we will work on entering our first cost, staffing.