You'd like to talk to your peers about strategic investment opportunities, not just defend your costs. But you're caught in the wrong dialog with the business.

Challenge

You'd like the proverbial "seat at the table" as a full-fledged member of the enterprise's executive team. As an enterprise leader, you'd like to work closely with your peers on discovering opportunities for your function to contribute directly to their business strategies, and on managing priorities so as to align your function with their business imperatives.

But instead of being drawn into discussions of business strategies, your dialog with peers primarily focuses on minimizing your costs -- sometimes even to the point of micromanagement, where clients try to dictate what you spend.

How can you get past concerns for your costs, build appreciation of the value and business relevance of your function, and engage in more productive discussions of how your function can leverage enterprise strategies?

Solution

There are two challenges, with a common root cause:

One is concern for your costs. Of course when you submit a budget that just forecasts your costs (traditional budgeting for costs by cost center), there's nothing else for executives to discuss. You're inviting the wrong dialog.

The other is a lack of perception of the strategic relevance of your function. When you don't explain the projects and services you plan to deliver for a given level of funding, there's no way to discuss your function as an investment portfolio.

The tone and focus of your relationship with the business begin in the annual budget cycle.

Traditionally, budgets describe what you plan to spend on general-ledger expense codes like compensation, travel, training, and vendor services. Of course, executives have to talk about something. What else have you given them to talk about other than your costs!?

Instead, envision a budget that describes the costs of planned projects and services (as well as the usual cost codes, ie, the rows as well as the columns). It includes both the "keep the lights on" necessities and speculative investments. This is termed an "investment-based budget."

An investment-based budget builds an understanding of the value you can deliver to the business. Clients can defend their projects and services. And budget decisions can be based on the needs of the business and strategic investment opportunities.

If executives challenge your budget, you can direct attention to the project and services and lead them into a discussion of what they really need and what they can do without.

Then, throughout the year, a business-driven resource-governance process empowers key clients to decide what to "buy" of your products and services, within the constraints of the finite checkbook created by your budget.

Comprehensive solution....

Other Resources

Audio Case Study: Selling a Transparent Budget Is Easy....

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

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