Managing budgets and forecasting expenses has traditionally been a spreadsheet-driven ordeal. Finance leaders grapple with the manual, error-prone process of gathering data from disparate systems, creating complex sheets laden with macros, and embarking on a journey that often takes months. However, this age-old method has its limitations, and in today’s dynamic landscape, it’s essential to break free from the shackles of spreadsheet-driven budgeting. Let’s explore how IT finance leaders and CIOs can revolutionise their approach to analysing spend, optimising costs, and enhancing agility.
The Spreadsheet-Driven Budgeting Quagmire
Creating a budget in the IT realm typically involves pulling data from various sources, including HR, ERP, CPM, and time-tracking systems. This data is then painstakingly normalised and presented in complex spreadsheets with macros and pivot tables. This manual process is not only time-consuming but also prone to human error. Moreover, it needs a connection between expenses and business outcomes, rendering it ineffective for informed decision-making.
One of the critical drawbacks of spreadsheet-driven budgeting is its rigidity. It represents a single point in time, failing to adapt to the rapidly changing landscape of cloud and SaaS consumption, where costs can fluctuate from month to month or even hour to hour. Additionally, this method relies on corporate finance systems that must be equipped to capture the level of detail required for technology managers to make informed decisions.
Furthermore, the world is experiencing swift macroeconomic shifts, rendering meticulously crafted budgets irrelevant in months. Prices change, staffing shortages occur, and supply chain disruptions disrupt the best-laid plans.
Re-planning and Re-forecasting: A Tedious Tango
Once an IT budget is set in stone, what happens when the markets suddenly shift? IT managers are faced with the arduous task of re-planning projects and finding ways to reduce costs. This process typically begins with a mandate from senior executives, often triggered by changing economic conditions. The IT managers must then gather their teams and dive into the tedious task of re-forecasting budgets. They must analyse the new market conditions, reassess project priorities, and identify areas where costs can be cut without compromising the organisation’s goals. This dance of re-planning and re-forecasting requires collaboration, creativity, and a deep understanding of the IT landscape and the company’s overall business strategy. It is challenging and time-consuming, but crucial for adapting to the ever-changing business environment.
IT finance then embarks on a journey to update the budget spreadsheets, a manual process prone to errors and misalignment. The data represents only a snapshot in time, making scenario analysis challenging. Inputs and comments from managers lead to broken templates, confusion, and a tedious back-and-forth. In large departments with numerous budget owners, this process can be excruciatingly slow, with limited collaboration between managers.
The Path to Transformation: Embracing IT Financial Management Systems
To respond to change swiftly, CIOs need access to relevant data for informed decisions. Though deeply ingrained, spreadsheet-driven budgeting and scenario planning are slow and lack the granularity and insight required for accelerated decision-making. Implementing IT financial management systems can help alleviate the pain of the slow and disjointed budgeting process. These systems provide real-time data and analysis, allowing CIOs to make informed decisions quickly. By embracing these systems, organisations can streamline their budgeting and scenario planning processes, enabling faster responses to changes and fostering collaboration between managers.
Recognising this, many senior IT leaders are turning to dedicated IT financial management systems. These systems streamline the budgeting process, eliminate spreadsheet bottlenecks, reduce manual intervention, minimise errors, and expedite reviews and approvals.
Gartner predicts that by 2024, 70% of successful CIOs will have such systems. These dedicated IT financial management systems provide real-time visibility into financial data, allowing senior IT leaders to make informed decisions and allocate resources more effectively. These systems enhance data accuracy and improve compliance with financial regulations by automating and centralising financial processes. With the increasing complexity of IT budgets and the need for agility in today’s rapidly changing business environment, implementing dedicated IT financial management systems is becoming a strategic imperative for organisations to stay competitive.
Data Ingestion: The Foundation of Informed Planning
At the heart of any planning process lies data. Determining IT costs involves aggregating data from various sources. Cloud service providers like AWS, Azure, and Google Cloud generate detailed billing reports, creating a sea of data that needs structuring. Apptio Cloudability, for instance, is designed to handle this vast amount of billing data, ingesting, normalising, and structuring it efficiently.
Apptio automates data ingestion through Datalink for other IT tools, using Extract, Transform, and Load (ETL) operations. It offers connectors for standard IT systems like ServiceNow, Oracle, SAP, and Clarity, ensuring data flows seamlessly into the budgeting process. The frequency of data updates can be customised to suit the organisation’s needs. This flexibility allows organisations to stay up-to-date with real-time data or update daily, weekly, or monthly. Additionally, Apptio Cloudability provides advanced analytics capabilities, allowing organisations to gain insights and make data-driven decisions regarding their cloud usage and spending. With Apptio’s comprehensive suite of tools, organisations can effectively manage and optimise their IT costs, ultimately maximising their return on investment.
Structuring the Data: The Key to Informed Decision-Making
Once data is ingested, it must be organised and structured to align expenses with business operations. Providing a standardised taxonomy that aligns with standard IT functions based on the Technology Business Management (TBM) Council’s standard is highly beneficial. This taxonomy eliminates the manual effort of data gathering and aggregation, providing detailed information to IT budget owners. Using a standardised taxonomy, IT budget owners can quickly identify and categorise expenses according to their specific IT functions. This allows for a more accurate and comprehensive understanding of where the budget is allocated and how it aligns with business operations. This detailed information makes informed decision-making possible, enabling businesses to optimise their IT spending and maximise their return on investment.
Budget Automation and Workflow: Simplifying the Process
With the cost model established, new budget plans can be created using IT financial management systems. These systems automate budgeting processes for more efficient and streamlined budget planning. Workflow features enable collaboration among departments and stakeholders, ensuring budget plans are well-informed and aligned with business objectives. Businesses can save time and resources by simplifying the budgeting process, allowing IT departments to focus on strategic initiatives and innovation. Additionally, IT financial management systems provide real-time visibility into spending patterns and help identify cost-saving opportunities. Organisations can make informed decisions regarding budget allocation and resource utilisation with accurate and up-to-date data. These systems also offer forecasting capabilities, enabling businesses to anticipate future financial needs and make proactive adjustments. Overall, using IT financial management systems enhances budget planning and improves overall financial management for businesses. With the ability to track the status of budget requests and monitor spending in real time, organisations can make informed decisions and effectively manage their IT spending throughout the year.
Dashboard Insights and Variance Analysis: Informed Decision-Making
Informed planning relies on data, and IT financial management systems provide many insights. Automated data ingestion and cost models allow real-time updates, eliminating lag time. Custom reports and visualisations empower budget owners to analyse performance against the plan, enabling swift decision-making and cost optimisation. Organisations can make informed decisions about their IT spending by accessing dashboard insights and variance analysis. These tools provide a comprehensive overview of the financial health of the IT department, allowing budget owners to identify areas of overspending or cost-saving opportunities. With real-time updates and custom reports, decision-makers can quickly assess performance against the plan and adjust as needed to optimise costs and improve efficiency. Overall, IT financial management systems are vital in helping organisations effectively manage their IT spending and make data-driven decisions throughout the year.
Modelling and Reallocation: Adapting to Change
Budget owners can model changes and scenarios within the IT financial management system when re-planning becomes necessary. They can add or remove resources, adjust spending allocations, and assess the impact of these changes in real-time. This agility enables IT departments to effectively align spending with business priorities and reduce expenses. By utilising the IT financial management system, budget owners can quickly adapt to changes in the business environment. They can model different scenarios and adjust resource allocation, ensuring IT spending remains aligned with current business priorities. This real-time capability enables IT departments to respond swiftly to evolving needs and make data-driven decisions that result in cost savings without compromising operational efficiency. Ultimately, this flexibility and agility allow organisations to effectively manage their IT spending throughout the year, maximising their return on investment.
IT Scenario Planning: Navigating Uncertainty
In today’s competitive landscape, scenario planning is essential. IT financial management systems enhance this capability by surfacing insights, enabling on-demand reporting, and driving variance analysis. With these tools, CIOs and IT finance leaders can respond swiftly to change and make informed decisions in times of uncertainty. By utilising IT financial management systems, organisations can better navigate the uncertainties of the business landscape. These systems provide real-time insights and reporting, allowing CIOs and IT finance leaders to quickly adapt their strategies and allocate resources effectively. This maximises return on investment and ensures that IT spending is aligned with business objectives, ultimately driving growth and success in an ever-changing market.
Running Efficiently Everywhere: Cloud Optimization
Many organisations are shifting from maintaining data centres to leveraging cloud services for innovation. However, this newfound flexibility also introduces challenges to cost management. Buying tools and software that offer visibility and interactive features is often necessary to optimise cloud spending. They can analyse usage patterns, identify opportunities for cost savings, and implement optimisation strategies to eliminate waste and maximise return on investment. Having real-time insights into cloud usage, enabling organisations to make informed decisions and adjust resource allocation as needed, is vitally important. Robust reporting and forecasting capabilities allow organisations to stay ahead of the evolving market and continuously optimise their cloud spend, ultimately driving business growth and innovation.
A Case Study in Transformation
The journey to transform IT planning isn’t theoretical; it yields accurate results. A case in point is Christus Health, a not-for-profit health system that successfully streamlined its planning process using Apptio. The organisation reduced manual efforts, improved visibility into IT spending, and built stronger relationships with business units. As a result, Christus Health was able to make more informed decisions about its IT investments, ensuring that resources were allocated strategically to support its growth and innovation goals. By leveraging Apptio’s tools and analytics, the organisation was able to identify areas where they could optimise their cloud spend, leading to cost savings and improved efficiency. This case study serves as a testament to the power of IT transformation to drive business success.
A New Era of IT Financial Management
The era of spreadsheet-driven budgeting is coming to an end. IT finance leaders and CIOs can now embrace modern financial management systems that streamline processes, provide real-time insights, and empower informed decision-making. By leaving spreadsheets behind and adopting these transformative tools, organisations can better navigate the ever-evolving IT landscape, optimise costs, and enhance agility. Furthermore, these modern IT financial management systems offer advanced analytics and reporting capabilities previously unimaginable with spreadsheets. With real-time insights into IT spending and performance, decision-makers can make data-driven decisions that align with business goals and drive success. Additionally, these tools enable organisations to accurately track and allocate costs, ensuring that resources are allocated efficiently and effectively. Overall, embracing these transformative tools marks the beginning of a new era in IT financial management where organisations can thrive in a fast-paced and competitive business environment.