You get accused of costing too much, even without the facts (such as like-for-like rate comparisons).

Challenge

Others accuse you of costing too much. It's not that they've done a rational comparison of your costs versus alternatives (decentralization and outsourcing). They just feel that your budget is too big.

As a result, you're under pressure to cut costs and deliver more value.

The problem is, you're not currently wasting money. And your staff are delivering exactly what the business needs.

How can you counter this unfair accusation and prove that your budget is well spent?

Solution

The root cause of this misconception is a lack of understanding of the value the enterprise is getting for the money it's spending on you.

Executives see the cost -- in your annual budget, or more blatantly if you allocate your costs to the business units. But they may not understand all the products and services you're delivering for that amount of money.

Building an understanding of value delivered takes more than a product/service catalog. Clients throughout the enterprise need to understand exactly what products and services their business units are getting.

To solve this problem, you'll need to develop a clear, understandable list of all specific projects and service-level agreements with clients, as well as the corporate-good services you deliver to the enterprise as a whole. And you'll need to associate all your costs with these deliverables.

You may do this with "show-backs" -- mock invoices that show clients what you've delivered after the fact.

More on the limitations of "show-backs"....

However, a much more powerful (and less expensive) solution is to portray your entire budget in terms of the costs of proposed products and services. This is termed an "investment-based budget."

Comprehensive solution....

"My budget is now much more realistic. [FullCost] has made the institution aware of what services we deliver and how much each of those services cost to deliver."

Dr. Joyce A. Mitchell Associate Dean University of Missouri Health Services

Other Resources

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

Case Study: We've Already Got Budget Spreadsheets, Don't We?
how Sonoco Products discovered the value of a fully developed budgeting and product/service costing solution

Anecdote: The Necessary Evil
why you're too busy keeping things running to focus on strategic challenges

Anecdote: On the Defensive
it's tough to defend all the indirect support services that make your products and services possible

Column: Allocations....

Column: Chargebacks....