It’s the end of the year, and for those on a calendar year budget, thoughts of “use it or lose it” are on some minds.
But wait – say what? CALENDAR YEAR budgets? I had an interesting dinner with a group of CIO/CTOs (current, ex, and retired) when the topic turned to budgets. The observation was made that annual budgeting really has become a thing of the past, in one way. No biennial, or annual budget processes. No annual, massive, all consuming two to three month budget exercises. Thanks to Oracle Financials, and SAP and the like, the ease of updating numbers in CFO land has made budgeting “just in time”.
Another way to look at it: plan for constant revisions that were inevitably unplanned for in the past. That has certainly led to a lot more time spent throughout the year on budgets, and a growth of IT financial staff to stay on top of it. But what really bothered this group of execs was the constant request for an estimate, any estimate, which would at best be a stake in the ground – and you could always count on it going down from there, like a monthly negotiation. Budgets more closely aligned with revenue forecasts, and we know how those can change.
So calendar year budgets are a misnomer, and a thing of the past….budgeting is a constant series of adjustments approaching singularity -- which in astronomy is the center of a black hole. Something many CIOs have just come to expect, although we may not have stepped back enough to consciously notice the change happen in our careers.
That said, the CIO’s role is one of putting structure around technology decisions even when, ultimately, those decisions are being made by the business. This may be through portfolio management techniques, decision-making constructs, or just good old cajoling. And those decisions lead to budgeting decisions. That’s where the “g” word (Governance) comes in. A CEO that has a CIO that manages that process well knows that the value of the CIO (and the IT department), and regards the CIO as an integral part of the management team. And that, as they say, is priceless…