Perils of IT Budgeting
No commentsBudgeting has always been tricky for the IT department. The main objective for the IT department is to get budgeting for applications and systems that are strategic in nature (i.e. systems that enable business strategy). Since budgeting is cost-based and finance is always looking for ways to cut cost, ‘keep the lights on’ systems are the only systems that usually gets funded. A legacy system which falls in this category gets just enough funding to keep that system limping along. It’s impossible to get rid of legacy system until you make a strong case that the legacy system is on its last leg.
Most of the Non IT executives do not seem to understand the complexity of sustaining old and decrepit systems. They also do not understand how an IT system can be used to attain business strategy. Thus, it is imperative for the IT executives today, to talk the language of business and make a case as to how an IT system can:
- Increase the speed of product release
- Widen the ‘economic moat’ by providing automation that outdistances the competitors
- Systematize the core competency
- Support sustainable competitive advantage
- Enable the Sales and Marketing to intimately know their customers
If you cannot make a case that can be categorized by one of the above mentioned reasons, then it’s nearly impossible to get the project funded. IT department will be left with no choice but to sustain the legacy system. Good luck with that!
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Sunday, September 2nd, 2007 at 7:55 pm and is filed under Business Strategy, IT Strategy, IT Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
