Forecasting For IT in an Unpredictable Climate
It’s a game! It’s a store! It’s entertainment! Nope, it’s the metaverse—a unique amalgam of online obsessions designed to keep thumbs clicking and Venmo accounts begging for cash. Or that’s what the creators of Forever 21 Shop City seem to be aiming for. Check it out.
Technology research and consulting firm, Gartner, and Forbes Magazine both list the metaverse among the top technology trends for 2023. While I don’t think associations will gamify shopping next year, we’ve all seen how quickly innovations become essential solutions.
In this unpredictable climate, budgeting for technology needs can be like trying to forecast the weather here in Chicago. With all the indicators pointing to clear skies, a blizzard could be on the horizon.
Pandemic fallout and economic uncertainty add layers of complexity. These tips and processes can help keep your IT projections on target.
History does repeat itself. But, looking backward was never the best way to predict the future. The last two years have kicked that habit in the pants. Or, at least, I hope they have.
It’s tempting to short-cut the budgeting process by rolling over last year’s numbers and making a few tweaks. These days, a far more intentional, collaborative, and forward-looking approach is required.
To begin from that wide-angle perspective, take my best advice for IT budgeting. Give yourself the luxury of time. Preparing the numbers is an annual process, but the thought and planning that goes into those figures should be continuous and occur throughout the year. When you stop thinking of budgeting as cyclical, you give yourself the bandwidth to create a meaningful document.
IT leaders must stay ahead of trends. They are the frontline of innovation. Take an entrepreneurial approach to the future, but balance risks and rewards. You don’t want to be the first on your block to own a self-driving car. But you also don’t want to be the last person in the driver’s seat. To create your IT wish-list, benchmark your organization against the competition, your members’ professional standards, and your resources.
Then, begin educating budget decision-makers on where your organization falls on that technology continuum. Education is a part of every budget planner’s job. Stephen Welch, former Executive Vice President and CEO at the American College of Chest Physicians, gives this example of the importance of making your case with data. (Stephen is currently Vice President, Education, at CCIM Institute.)
“The board supported CHEST’s move from in-house technology systems to cloud-based platforms because the staff made a thoughtful business argument for this upgrade. Physicians, who were all moving to electronic health records, could also appreciate the benefits. Similarly, the board supported building CHEST’s new headquarters and Innovation, Simulation and Training Center because they understood the importance of offering this state-of-the-art education.”
Reflect Goals and Strategy
Strategy and technology are intertwined, now more than ever, IT budgets impact the entire organization. A budget is not just a collection of numbers, it should reflect your association’s overarching goals.
Begin by reviewing your IT roadmap. What, no IT road map? Without a roadmap, you’re probably not going very far or fast. This document translates intention into action and tracks progress across initiatives. It describes the hardware infrastructure, software platforms and architecture, and how they will support ongoing and upcoming initiatives and projects.
The systems and needs that are outlined are designed to advance the strategic plan. If you are lacking this direction, make time to chart your course before the next budget cycle. External support from a tech-friendly advisor can be helpful in creating this tool.
Developing the budget is the appropriate opportunity to pause and adjust for shifts in priorities or to address changes in the marketplace. Create a runway long enough to allow time for discussions across the organization, focusing on both your roadmap and the strategic plan. Ask departments to consider what has, or will, change since these documents were written. If you track key performance indicators or objectives and key results, these metrics can reveal where you are succeeding or where additional IT support is needed.
Tell a Clear Story
The importance of a well-written budget narrative can’t be overestimated. This rationale gives the figures meaning. It tells each number’s story and explains why you need the funding and how you calculated the amount.
Prepare your narrative with an uninformed audience in mind. Any reader should be able to understand what you are asking for and why. The narrative is a sales tool that educates your board and other leaders about IT activities across your organization and demonstrates your understanding of the department’s potential for revenue and the reasoning behind expenses. A clear rationale goes a long way toward winning important funding.
This exercise isn’t just for outsiders. Careful exploration of the activities behind the numbers can help you identify where to add, change, delete line items, or include ancillary expenses that you may have overlooked, such as:
Maintenance and Replacements
Maintenance costs typically get short shrift. Don’t get caught with a technology deficit. Allocate enough funding to keep systems in great working order. Upgrade outdated platforms before they become a liability. No one enjoys using sluggish, ailing hardware. Keep your teams happy and work moving at the speed of business.
Don’t budget your organization into a box. Set aside resources so that when great ideas surface, you are ready to implement breakthrough initiatives.
Gartner recommends allocating funding to run, grow, and transform (RGT) your business. Most companies spend 65% of their IT budgets on the routine expenses of operations or the run portion of the equation. What you reserve for growth represents the costs of scaling business to new goals. This bucket might include additional expenses for increased network, cloud, or storage capacity, new licenses, or additional staffing.
The transformation line is for innovation, or to take your organization in a new direction. The stakes are high risk and high reward and might involve entering a new market or creating a new product.
Inadequate staff training is the source of avoidable IT headaches. Don’t rely on inexperienced users or subpar communicators to train others. Set aside the funding you need for the experts to demonstrate the most effective strategies for using your software and hardware. Budget training for new employees and to provide updates or refresher courses for current staff.
Cyber Security and Disaster Recovery
Remote work adds layers of complexity to security and disaster recovery. Make an audit of both areas a pre-budget priority. Skimping in either line could have expensive consequences.
If your roadmap calls for a major purchase, seek support from consultants or vendors to appropriately estimate the costs. But before calling in the experts, be crystal clear about your goals and the outcomes that you want to achieve. Ask probing questions to ensure that new or updated technology is the right solution to the direction you want to take or problem you need to solve.
Frequently, when my first conversation with clients is about new technology, I discover that the problem is not software or hardware, it’s people.
Here again, collaboration is important. Gather feedback from key staffers who will be involved or impacted by a new initiative. Take an inventory of what you own and what you will need to purchase. Consider solutions that can grow along with you.
Budgets aren’t about perfection; they are an opportunity for exploration, evaluation, and foresight. Even the most thoroughly researched and meticulously crafted document can be upended by unpredictable weather. Imagine a variety of scenarios. You may not be budgeting for a store in the metaverse yet, but by keeping the possibility in your sights, you become a more informed forecaster.
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