Friedkin Companies’ IT road map contains output from two main initiatives carried out by the IT department. The first initiative involves the process of understanding the future company’s goals and objectives and ensuring that IT has the right projects to support the company’s goals. The second initiative has the same intent, but the drive is more from a technology perspective. This initiative requires understanding the future technology trends, evaluating how they are going to help us in achieving our goals, and choosing which new technologies IT is going to implement in the next 3 years. The first initiative generates business projects, while the second creates IT initiatives. Both business projects and IT initiatives are critical in our road map to achieve our company’s goals and objectives.
When it comes to our budget, business projects and IT initiatives have a third competitor contending for resources: Keep The Lights On (KTLO). IT has to maintain severs, licenses, applications, storage, business continuity, network equipment, telephony, and other resources that require money in order to keep them functioning. KTLO encapsulates all of these costs.
Without the right funding, IT roadmap projects won’t be translated into reality. On the other hand, without spending the necessary funds, the business will have a difficult time continuing to operate and grow. This conflict is one of the most difficult ones to resolve when you are building your budget. In addition to this conflict, there is another common challenge that we need to address when we are working on budget planning. This challenge is our default tendency, as technology professionals, to focus more on technologies as solutions and less on rewriting or creating of new business solutions.
To deal with the above conflict and challenge, we utilize the following approach for budget planning. Our approach breaks the budget into three main components and defines simple rules for each one of them. The three components we have included are Keep The Lights On, business projects, and IT initiatives.
After validating our three-year road map, our budget effort starts with understanding our Keep The Lights On costs. The majority of the effort in doing this is in understanding, validating, and minimizing our KTLO costs. After this step is completed, we are more aware of the funds needed to guarantee our business operation for the following year. Our goal is that KTLO will comprise 60% of our total budget. If you have toxic IT assets, as we do, KTLO would include time and effort to decommission those assets and replace them with new assets.
After determining our target budget and KTLO costs, we should be able to know how much funds remain to spend on business projects and IT initiatives. Having this crucial information, we can work on budgeting prioritized business projects. The main challenge while working on business projects is to understand the time needed both from IT and the customers. It is necessary to ensure that each project is provided with the time required by all parties to successfully finalize it. This step usually pushes several planned road map projects further to the next year due to the unavailability of IT or of customers’ resources. When this step is finished, we know which business projects are going to be done, when they will be completed and the funds needed to carry them out.
The budget left after KTLO and business projects is dedicated to IT initiatives. As in business projects, while working on IT initiatives, you need to make sure that you have available IT and customers’ resources to run and successfully finish a project. After IT resources are already allocated to KTLO and business projects, there aren’t very many available resources to finish all of the proposed IT initiatives. Based on available resources and given priorities, we end up with a list of IT initiatives.
Following this simple budget process, we ensure that:
- We guarantee our ability to keep the company operating.
- Most of available IT resources are focused on business needs.
- All of our projects and initiatives have enough resources to finish them successfully.
- We are allocating time and money to introduce new technologies that will result in competitive advantage.