Once the budget is set and the fiscal year begins, a demand-management (aka "governance") process is needed to adjust priorities throughout the year. This keeps your organization aligned with ever-changing business needs, while keeping expectations within available resources.

Demand management is sometimes called an "intake" process, "investment portfolio management," or just "governance."

Key concept: Your budget (pre-paid revenues) is channelled into checkbooks belonging to the various client business units (and a checkbook for investments in your organization itself).

The appropriate "pursers" are appointed for each checkbook, typically a committee of clients. This is not a general-purpose "steering committee" that oversees you. It has a very specific purpose: It's only job is to decide priorities within those limited funds (i.e., to write checks).

Implementing a demand-management process involves deciding the various checkbooks and channeling your budget into them; appointing and training pursers for each checkbook; communicating to clients how they can get their requests approved; and communicating to your staff that they mustn't work on projects without a purser's approval (i.e., without funding).

This demand-management process adds additional benefits to those of investment-based budgeting:

"An excellent systems approach to governance."

Dr. Michael Zisman Vice President, Corporate Strategy, IBM

• Clients are empowered to control priorities dynamically throughout the year. Your organization remains aligned with clients ever-changing needs.

• Pursers must live within their means, so clients don't expect more of the organization than it has resources to deliver.

• Your organization isn't perceived as the obstacle; it's clear that the only constraint is clients' spending power.

Other Resources

Column on portfolio management....

Provocative article: The Role of Steering Committees: a productive way to engage the business, or a bureaucratic albatross?....

Provocative article: Corporate Governance: systemic approach versus traditional oversight and audit....