Managing Your Budget and Your Strategic Vendors
Effective budget management means, among other things, ensuring capital investments are aligned with the business’s major priorities and initiatives.
By Larry Bonfante
I hear a lot these days about shrinking IT budgets. The reality is that the days when your influence was judged by the size of your budget or your headcount are long gone. Having an overinflated operating budget or headcount today can spell your demise. Effectiveness has always been critical to our success, but efficiency is just as important. I make a point every time I present to my board of directors at the U.S. Tennis Association (USTA) to remind them that my team is delivering IT operations for less than half of our industry metric. This gentle reminder usually cuts off the “Can you lower your costs?” conversation. As a matter of fact, my treasurer once asked me if he was giving me enough money to do what needed to be done. That’s not a question a CIO often expects to get asked!
A key part of managing our budgets is that we focus on four basic principles:
1. What matters? We ensure that the capital investments being requested of our board are aligned with the association’s major priorities and initiatives. If it isn’t important to our leadership and there isn’t a quantitative or qualitative return on investment that impacts our mission, we don’t do it. End of conversation.
2. How can we lower the ongoing costs of IT operations to help us self-fund innovation? I work for a not-for-profit organization. We don’t have the luxury of a budget for innovation. Therefore, we need to find creative ways to lower operational costs in order to self-fund our new ideas and innovations.
3. If the business isn’t willing to sponsor the initiative, then it isn’t worth doing. I know a lot of IT organizations that are running projects that don’t have a business sponsor. I know organizations that are running projects that, if they failed, no one would care. Even worse, I know organizations that are running projects that, even if they succeed, nobody would care. We only run projects that our partners in the business are willing to sponsor and remain engaged in helping to deliver to completion.
4. We have no religion about outsourcing functions that can be done better and cheaper by third parties. Our goal is to deliver business value, and we will take any course of action that helps us accomplish this objective.
Another important thing we focus on is ensuring that our “vendors” become “partners.” Every individual who works under the auspices of my organization is a direct reflection of me and my team. Vendor partners are very much an extension of my team. They need to be drinking the same flavor of Kool-Aid as the rest of us and need to be as excited to be a part of what we’re doing as my staff is. While we certainly work to negotiate fair value from our contractual relationships, we also try to create win-win scenarios where our vendor partners are happy to be engaged with us because they are making a fair margin for their effort and their people enjoy being a part of our organization. Beating up your vendors and treating them poorly only ensures that you will receive sub-optimal results from less than stellar resources. My vendors don’t know whether someone I send to help them is a USTA badge holder or not. They only know that “Larry send them,” so they better be a good representative of my organization and our vision.
About the Author
Larry Bonfante is a practicing CIO and founder of CIO Bench Coach, LLC, an executive coaching practice for IT executives. He is also author of Lessons in IT Transformation, published by John Wiley & Sons. He can be reached at Larry@CIOBenchCoach.com.