IT SPENDING PER END USER ($)

Financial services

137,538

Insurance

34,721

Energy

25,365

Utilities

24,509

Telecommunications

20,002

Information technology

17,489

Banking

16,612

Healthcare

14,187

Manufacturing

13,652

Consumer products

13,510

Pharmaceuticals

13,270

Hospitality and travel

11,406

Chemicals

10,822

Media

10,006

Transportation

9,887

Retail

8,846

Food/beverage

6,884

Electronics

5,998

Metals/natural resources

5,846

Professional services

5,098

Construction and engineering

4,003

Overall

13,968

Exhibit 17.8 Sample Technology Inventory

IT EMPLOYEE PERCENTAGE OF TOTAL

Exhibit 17.9 Employees in an Organization as a Percentage of Total Employee Population

Any changes to major applications in the past 12 months affecting support or development

Current approved IT project inventory and prioritization Estimation of current peer spending (see Chapter 3) Payroll statistics for the IT department

Following is an overview of the process:

The budgeting effort is typically kicked off by the finance department

in preparation for the next fiscal year. Most often the IT manager will be given the following information to

get started:

-Detailed accounting reports of the prior 12-month IT spending.

-Template spreadsheet with budget categories already included and calculation complete.

-Estimation of overhead line items to be allocated to the IT department.

Complete a first draft-there are two different approaches to build the budget:

-Zero-based budget (recommended, but more difficult). -Run-rate budgeting.

-These methods are outlined later in this chapter.

-The first draft should incorporate all known information on service level agreements and anticipated projects (see Chapters 7 and 15). Review the draft with CFO or other direct reporting relationship. Produce and present the second draft. Incorporate input and produce final draft.

Final draft goes through approval with IT steering committee and senior management.

Once approved, the final draft is sent to the accounting department as

the final new fiscal year budget for IT. All actions for the subsequent 12 months will be judged against this

final budget.

At times there will be a quarterly and/or mid-year budget review sessions to adjust the budget to account for new known information.

Timing

The budget cycle usually kicks off between September and November, or one to four months before the end of company fiscal year. The budget, in most cases, needs to be finalized in the last month of the fiscal year.