Clients demand more than your resources can deliver, and blame you when you can't produce all they want.

Challenge

"We gave you all that money," they might say. "Now it's your job to figure out how to satisfy the needs of the business."

The problem is that the money in your budget can never be sufficient to fund all the things that clients want. But they have no way of knowing that. Even if they did, they have no way of getting what they need other than pressuring you to consider them a priority.

An associated problem is that your products and services appear free to clients, so there's no limit on what they'll ask for.

In a futile attempt to satisfy unrealistic expectations, some organizations make dangerous mistakes:

• Rob Peter to pay Paul, and everything comes in late. You're rightfully accused of being unreliable.

• Cut corners on quality and take risks. You're rightfully accused of poor workmanship.

• Overwork staff, and teamwork breaks down (no time to help one another) while turnover rises (with the best people leaving).

• Cut internal investments (training, innovation, infrastructure, process improvements), and productivity deteriorates in an unsustainable downward spiral.

A "governance" steering committee to set priorities among major projects won't solve this problem. After ordering the projects, they'll still expect them all (as well as all the little projects and ongoing services which consume the bulk of your budget).

How can you both mitigate demand and match expectations to available resources?

Solution

The truth is, all your products and services have a real, full cost to shareholders/taxpayers/donors. Your budget only pays for a finite set of products and services, and expecting more of you is unreasonable.

An investment-based budget defines exactly what clients can expect from your organization.

If clients want more, you willingly supply it -- at an additional cost. When clients supply additional funding, you can expand supply (eg, hire contractors and vendors) to satisfy incremental demand, far better than turning clients away.

Thus, expectations match available resources.

Comprehensive solution....

"I definitely would recommend FullCost to any organization where demand outstrips the corporation's ability to pay for it.... It really does align your resources to the strategic goals of the organization."

Bob Bender CIO, St. Mary's Hospital and Duluth Clinic

Other Resources

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

Case Study: Re-inventing the Budget Process
the cost of success: interviews with CIOs on the benefits of budgeting for products/services

Anecdote: Eating Your Seed Corn....
how unbridled expectations damage an organization

Anecdote: The Annual Set-up....
also available in a government version
where unrealistic expectations come from

Anecdote: Managing Expectations....
where unrealistic expectations come from

Column: Managing Expectations....

White paper: Do More With Less -- NOT!
how to solve the problem of finite resources and infinite demands....