If your budget is cut (or doesn't grow to meet business needs), clients suffer. But they don't help you get the resources you need to deliver what they business needs.

Challenge

As a shared-services provider, your budget limits the products and services you can deliver to clients. It's in their interests to help you get enough funding to satisfy their needs.

And, of course, business leaders add tremendous credibility when they vouch for your budget requests.

But clients may think it's your problem to defend your budget, not theirs. Then, they blame you when your limited resources aren't adequate to satisfy their demands.

Perhaps they support a few large, visible projects. But the bulk of your budget is left to you to justify (even though it pays for services they consume).

How can you induce business leaders to help you plan and defend your budget?

Solution

Clients can't defend your spending on costs like compensation, travel, training, and vendor services. But they can certainly explain why they need to buy your products (projects) and services.

An investment-based budget forecasts the costs of your products and services, as well as traditional general-ledger cost codes. It can be sorted by business unit, such that business leaders see exactly what you propose to "sell" them, along with the full costs of their purchases.

Then, they can defend their needs for your deliverables, and everybody will understand the value you'll deliver for different levels of funding. And if your budget is cut, you can explain exactly which services will be cut.

You may not get all the budget you'd like. But you have a far better chance of getting what you need when all your clients are on your side.

Comprehensive solution....

Other Resources

White paper: Best Practices in Budgeting
an introduction to investment-based budgeting.

Video Overview: The Leading Edge: Investment-based Budgeting
The problems it solves, the concepts and process, examples, and results.
SmartPros' Financial Management Network (30 min)

Video Case Study: Service Costing and Investment-based Budgeting
State of Montana IT shares its reasons, implementation experiences, and results. (30 min)

Audio Case Study: Selling a Transparent Budget Is Easy
State of Montana IT finds ready acceptance at every level for its investment-based budget. (15 min)