Software for IT Budgeting and Planning? 37
MoneyConscious asks: "My company is still pretty small (100 people) and has never had any real structure around much of its operations. I manage the IT group and would like to get a handle on our yearly budget - expected expenditures for planned (and some unplanned) projects, plus regular maintenance and growth. I've taken a crack at a few different spreadsheets, but always seem to come up with something a few weeks later that requires a re-write of the budget (for instance, planned versus actual cost). We are a mix of Windows and Linux, so I have some flexibility in regards to budgeting software solutions (web-based SourceForge apps, Excel templates, and the like). What tools do you use to keep track of estimates and record actual expenditures to see how your budget process is doing?"
Spreadsheets... And planning. (Score:3, Insightful)
Nothing wrong with the spreadsheet we use to track our budget cos it was well planned out!
Start with what you spend today (Score:5, Insightful)
Get some spreadsheets together that break down all of your costs... keep a tab of staffing, consultants, licensing, hardware & software acquisition, hardware & software maintenance, and overhead. (rent, utilities, travel, copy machines, secretaries, miscellaneous)
Once you do that, you'll actually be in a position where you can control your costs and can create accurate & fair cost estimates for expansion of the services you offer (and the money that you spend)
Its a real pain in the ass to get started, but it pays dividends quickly. At a place where I worked, the IT shop billed its "clients" (other divisions of the company) based on the number of PCs that each client owned. After breaking down the costs, it was discovered that for most clients, user counts drove costs more than hardware counts, and that some divisions of the organization were in effect subsidizing others.
A new hybrid billing methodology that billed for acutal costs ended up being for more equitable and less obtuse.
Re:Spreadsheets... And planning. (Score:4, Insightful)
MS Project Server can certainly do this, but is pretty much overkill.
I don't know of any open-source domain specific tool for IT budgeting. You could, of course, use a spreadsheet other than Excel if that's your preference. Spreadsheets is pretty much spreadsheets.
Re:Microsoft Project Server (Score:3, Insightful)
With that said, it's easily the most cost-effective and most flexible project management solution on the market right now. Most of your users won't need Project Professional, but just a Project Web CAL. It'll take about 2-6 months to implement, depending on the complexity of your organization. It can also take less than a week.
I am an IT manager and can say... (Score:4, Insightful)
You should have a good spreadsheet/system for maintenance, software subscriptions, etc. That sort of thing you can project forward. You can also put depreciation on that, since that's a known quantity, and leases. Likewise, known expenses - salaries, benefits, energy bills, etc. Add some factor for growth, raises, etc. Of course in a large environment this could be hundreds of budgets that roll up, or an ERP package, etc.
But cap-ex (new things to buy)? Forget it...my current employer (Fortune 500) does budgeting that's done by August for cap-ex for the following year (i.e., in Aug 2005, we're set for 2006 Capex...16 months in advance!) It never works and we're always doing out-of-budget, though of course conversely there are things that we don't get to do or turn out not to be needed. That sort of budgeting just encourages everyone to add large padding because going under budget is always good, but going over is bad.
Unless you have a good sense of business needs that tie into your IT needs (which is really hard to do in medium or large environments), CapEx is a guess. Or just don't do CapEx budgets...some really big companies don't do them because they're useless. I can predict the next 90 days pretty well...beyond that it's really difficult.
Another trick with IT budgeting is that sometimes projects come along and someone says "oh, I'll pay for that, no problem". Great. But adding that server or that 2TB of disk means I have to add X and Y and Z over here in infrastructure or buy licenses for this or that or you trip over a point where I have to add a new cabinet or a new blade, etc. Yes, yes, utility computing models will save us all, but simply keeping track of all the dependencies is complex.
If I was king, my approach would be to budget out everything that is known (expense, depreciation, etc.), add growth where it's known, and then do CapEx out of a budget cycle or on a very short budget cycle, justified as-needed. Unfortunately, that's really hard to do in a public company where capital spending is something analysts watch.
Suggest a more systemic approach (Score:4, Insightful)
If you're going to set up an IT budget, it would make more sense to me to dovetail that into a company-wide strategy that your accounting folks and upper management support. After all, the reasons you'd want to provide structure are to track and report performance to management, utilize budgeting and planning to justify the things your department has done and want to do, lay the groundwork for additional human resources, etc. As a result, you'll want to be speaking in a language and format that management both supports and understands.
As for my experience as a Director of IT, I start with a rolling three-year strategic plan, reviewed bi-annually and signed off by the President and his staff. Flowing from that are my expense budget and capital budget. Expenditures are tallied against account numbers and tracked monthly. Capital items are scheduled by quarter. Both are tied to the strategic plan. Major projects receive detailed project planning via a statement of work, and are tracked to time and budget using a simple spreadsheet and/or GAANT chart.
Day-to-day project planning, including what used to be 'walk-in' requests, are handled by aweb-based system (developed in-house) where end users can make requests (including predicted cost savings), I either reject requests or assign them to an employee, the employee carries out the request, documenting what was done, time taken, testing performed, etc., and the end user ultimately 'approves' the request by indicating that the work done satisfies the request requirements. This approach is also Sarbanes-Oxley friendly, btw.
Emergency work is done and documented with my approval, and is documented post-mortem.
I have never needed to track my employees' use of time. As with every IT department I have ever been associated with, the amount of requested work far outweighs the available time. My people and I are busy from the moment we walk into work until we leave for the day. For the value a good IT department can provide a company, I have never seen a need to have them 'punch a clock'. Tracking overall project status is more than enough.