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Hooray! It's Budget Time!

September 3, 2009
by Neal Ganguly
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A good friend of mine has a favorite saying which states “given enough, time, money and resources, anything is possible”. I think most would agree that it’s a fairly accurate statement within practical constraints (for example, no amount of time, money or resources will make me a good dancer). Regrettably, time is almost always limited, money is usually in short supply, and resources generally scarce (often related to the money problem). This gets to the heart of one of the greatest challenges for the CIO and, in fact, any organizational leader. Load balancing, resource management, project portfolio management, pipeline management – regardless of the buzz phrase one chooses to apply, the issue is prioritization.

While prioritization is an ongoing exercise for executives, at no time is the need to prioritize more acute than budget time. Organizations on a calendar year budget are very likely mired in the planning and budget process right now. For the CIO, this means a seemingly endless list of wants (requests, needs, demands) from the customer, and an excruciatingly limited amount of resources with which to address the wants. None of this is news to my CIO colleagues and there are a variety of tools and structures that can be used to help manage this challenging process. My concern is not about the challenges of prioritizing wants during budget time – it’s in the validity of the budget process itself.

I can’t speak for all my colleagues, but at our facility the budget planning process generally starts in April or May of the prior year, during which time needs are analyzed, budgetary estimates are established, and requests are made and prioritized – ultimately leading to a budget approval by the board in the 4th quarter. So there are 6-7 months between the identification of a need and the commitment of funding. If needs are identified after the 2nd quarter they may be deferred to the following year’s budget process. Thus, in theory, a need identified in October of this year, may not get funded for over 12 months. In the meantime the analysis process consumes a great deal of time and attention of IT staffers who are also assigned to ongoing projects.

In the fast paced world of IT – particularly Healthcare IT – things are changing rapidly and the old budgeting paradigm does not lend it self to the flexibility needed to quickly shift direction in response to changing priorities. This may apply less to complex multi-year projects than it does to the ad-hoc stuff. It’s the ad-hoc stuff that really clogs up the pipeline, and is often far less thoroughly planned out- and can negatively impact all timelines.

Should IT budgeting be an annual exercise, or should it happen more often? How can the needs analysis process be streamlined to ensure that requests come to IS analysts with clear justifications? Should those analysts reside in IS, or be based in the business units? Do business unit leaders have the skills to properly justify their wants? These are just some of the thoughts floating around in my head as we prepare to submit our 2010 budget requests. Good luck to my colleagues who are in the same boat

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