Typically, the organization structure is, managers, project managers & senior manager will be reporting to director in an IT organization. Directors will have a functional responsibilities like sales & marketing, customer service, finance and etc. Managers and senior managers are responsible for the managing the project, lights on and enhancement. For a zero based budgeting, managers of each application area will be required to come up with forecast. The skills required for each managers to come up with forecast are given below.
- Understanding of over all business process
- Understanding of their respective business strategy and their current annual business plan. For ex. if a manager supports call center systems, then that manager must understand customer and service business area’s plan for that year.
- Understanding of external market condition
- Understanding of work load in their area in the past and correlation with business strategy and its annual business plan
- Understanding of technological obsolescence and flexibility of their systems
- Trend analysis
The above skills will be used to develop the forecast for keep the lights on, discretionary and projects spend for their respective systems, infrastructure, shared service.
Each manager will have set of systems to support. Logical group of the system are assigned to an internal order number. Each internal order number will have a set of systems. The light on, discretionary and project spends are allocated for each internal order number.
Only the department level cost center and general ledger (GL) number level cost will be submitted to the controlling office and eventually in to the enterprise financial systems like SAP or Oracle Financials. The cash budget will have line items only GL level (like employee, contractor, and etc) , director level consolidation of GLs and department level consolidation of GLs. The rest of classification like lights on , enhancement, internal order number and etc are just allocation within the ITM budget for better understanding and reporting.
This step completes the creation of budget for the IT organization. The next step is to track the actual and report to stakeholders. The next part will focus on tracking the actual cost and reporting it to the various stakeholders.