Clients don't understand where all your money is going, and suspect you of waste and inefficiencies.

Challenge

Clients (especially top executives) see the cost of your function quite clearly. But they don't understand where all that money is going.

As a result, they suspect you're hiding away money for your own pet projects, or wasting it on inefficiencies.

Your challenge is to prove that all the money in your budget is being spent wisely to serve the business.

Solution

Trust is built when clients understand where your budget is going, and how it benefits them.

Thus, the solution is linking all your costs to the products and services you deliver to the business -- to your clients, and to the enterprise as a whole. This is what's meant by the phrase, "cost transparency."

Cost transparency is needed at two points in time:

First, your budget should forecast the cost of the products and services you plan to deliver (what you plan to "sell," not just what you plan to spend). This is termed "investment-based budgeting."

Then, throughout the year as you deliver projects and services, an invoice should explain the costs that went into those results.

The invoice is reassuring; but the more important step is investment-based budget. This is where trust pays off in the form of proper funding for your function -- a budget based on the needs of the business and the investment opportunities available at the time.

Furthermore, the planning process that produces the budget also calculate rates, which are necessary to produce invoices. (Invoices should multiple consumption by published rates, not actual costs, to build trust through stable rates without surprises.)

Therefore, the place to start building trust through cost transparency is investment-based budgeting.

Comprehensive solution....

Other Resources

Case Study: From Adversaries to Advocates
how budgeting and product/service costing improved relationships between IT and its clients

Case Study: Can You Really Know Your Full Cost of Service?
Riverside County IT found the way

Column: Shared Services....

Column: Decentralization....

Column: Chargebacks....

Column: Allocations....

Anecdote: Client-driven Portfolio Management (Out On a Limb Alone)
You're expected to defend the budget that's really there to benefit your clients, and blamed when you don't get enough.

Anecdote: No More Games!
How knowing the true cost of your products/services can change the nature of budget negotiations.

Anecdote: Our IT Allocation is Too Small!
How to turn the tables and get clients defending a larger IT budget.

Speech abstract: Investment-based Budgeting
why CFOs should mandate a new format for budget submissions