You are the IT department head in your company. There are multiple company objectives that you are required to meet, some initiatives of your own, contingencies that may come up. You have to make projections about how much you need for the coming year on heads like hardware, new software and upgrades, hiring, training etc. You know quite well that finance will not give you all you ask, so your best bet would be to make a projection such that most of what you asked will be approved!

Then there is also the matter of allocating finances once you know how much you will actually have. Again you have to make critical decisions, never been an easy task. Just take a look at how finance ministers of various countries struggle to manage priorities. Add to it falling revenues in times of recession (as true for 2008-2009), which means supplementary allocations in the middle of the year may be hard to come by. And finally, a lack of financial training among managers of technical departments can make the whole thing a terrible nightmare.

Our 2009 Budget Toolkit for IT Managers is an attempt to help you out. We have attempted to create templates for various budgetary components that you can use to derive accurate guesses for how much money and resource allocation is needed for every input and process.

When preparing a budget, some questions you need to answer are:-

1.What are the purchases I am making this year? How are the payments being rolled out (amortization)?

2.What is the return on the investments (ROI) I am making? Will I be able to earn back my spend?

3.What is the total cost of each application you choose to buy? Some components are directly estimable, while others add to the cost indirectly. E.g. your costs need to include performing backups, supporting IT servers, handling desktop costs, and allocating management overhead.

4. What IT resources are being allocated to each department in your organization?

5. What are you paying out in salaries?

Once your budget allocations are made, there is a lot of monitoring you have to do. Are your purchases and payments happening on schedule? How are each of your projects doing financially – i.e. are they running in deficit, break-even or surplus?

Each of these will be taken up in detail in the coming blogs.