IT Budget : Run, Grow & Transform

One method of coping with your IT budget is by working with the “Run, Grow & Transform – Your business”-model. In essence is sets you to categorize your budget into three areas.

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Run covers the general day to day expenses of keeping the IT infrastructure running. Actually, this is your “SIB” (“Stay In Business”). Think in terms of lifecycle management and the human resource costs to maintain your environment.

Grow covers the expenses for expansion of services or growth of the company. Things like extending your virtualization or storage farm probably fall under this category. This budget aims to help the organization introduce new capabilities or improve existing ones.

And Transform covers the costs are made to change your nature. Here you should think of things like implementing a shopfloor system when coming from a paper workflow within an industry. These initiatives might seek to identify, for example, the right technologies for new organizational capabilities; fundamental changes to business processes; or a new product or service offering.

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When managing a budget in this manner, you should be able to gather tour full “Run” budget and a part of the “Grow” budget. If you fail to do so, then you have lost the confidence of your board. This part of the budget is in reality the minimal level you need to stay on par. A lower level will force you to start phasing out services from your service catalog!

Organizations that have to trim IT budgets should avoid cutting Run initiatives. Such cuts would introduce operational risk. If an organization already is going through a tough stretch, the last thing it needs is a server, application or network failure. This really is your “Stay in Business” IT budget.

Grow budget items should tie directly to the organization’s strategic initiatives. These initiatives usually are not as mission critical as Run initiatives and often have some time flexibility, which means that they are good candidates for starting early when additional cash is available, or for deferral if cash is tight.

When finances are tight, transform initiatives often are the first to be cut or deferred—unless they are associated with key strategic initiatives that the organization views as essential to its continued operation. Even if the organization doesn’t deem certain Transform initiatives immediately essential, care should be taken when considering cutting or deferring them. That’s because Transform initiatives often are key to the organization’s long-term health. Failure to provide adequate resources to Transform initiatives can stunt an organization’s future success.

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3 thoughts on “IT Budget : Run, Grow & Transform

  1. Does the run portion include depreciation. Also assume this exercise is split into 2 parts: Part 1 the IT Operating Expense Budget…Part 2 Capital portion

  2. The run portion also covers your depreciation. Once a grow/transform project is done, it is handed over to the operational part.

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