Why Are IT Budgets Hard to Get Approved? (and How to Make It Easier)
As the time to get the IT budget drawn up nears, it can be stressful to think of ways to get it approved. Many organistions are not prioritising IT and this can make approvals harder and harder. But why is this?
Recent statistics show that IT budgets are growing steadily, yet the allocation of those budgets is still heavily in favor of operational tasks. As a result, little is left for innovation, change, and protecting against risk. This poses a real issue, as companies that keep the status quo in their IT often get left behind their competition and fall victim to the ever advancing cyber crime.
But the C-suite may not understand this.
So why are IT budget Approvals such an issue?
There seems to be a gap between what the board has in mind for IT and what IT professionals feel is needed. These issues most often boil down to having vastly different priorities and not seeing eye to eye. There are several reasons why it comes to that:
1. IT is seen as a drain
The biggest problem with IT budgets and the whole approval process is that they are seen as an unnecessary drain on the budget. When the board can’t seem to understand just what you are doing with the budget, it’s hard to justify it at all.
2. The board doesn’t know that IT contributes to revenue
There is rarely a direct correlation between IT budget and sales (i.e., revenue generation), and return on investment isn’t as apparent as with other departments. As an IT pro, it’s your job to shed light on that correlation.
Basically, the questions you want to answer are:
- How are you improving customer experience?
- How is IT helping with more sales?
- Will your IT plans improve production?
- How are you improving efficiency?
- How are you reducing business risks?
3. It’s difficult to present hard numbers
Another reason why it’s hard is because the very nature of the work you do is hard to quantify: How can you put numbers of the skills and expertise you have in your IT department? How does that translate into a figure that the board will understand? Can you quantify risk reduction or potential risk impact? How can you justify everyone’s role in the department?
4. There are issues in communication between IT and the board
Failure in communication is another reason why budgets seem to be stuck. When you don’t speak the board’s language, you will always experience a disconnect when you talk to board members.
They will talk analysis and business risk. On the other hand, you will talk about new technology, specifications, and why it’s better than what you already have. This causes a miscommunication and means getting approvals is a much longer process.
5. Budgets are seen as operational only
Another issue with approval is that budgets are often predetermined. This most often happens when the board is viewing IT as a strictly operational asset – one that is there just to keep things working instead of making it possible to improve business, increase revenue, and reduce risk.
6. Board response is slow
The environment nowadays is changing much faster, with many companies needing to adopt lean and agile methods to keep up. And IT seems to be left behind. The board is often set in its ways and just keeps IT budgets the same, although some of the technology might already have reached the end of its life cycle.
So how can you make the approval process easier?
You might feel it’s frustrating to deal with so many hurdles, that there is no way around it .The most important thing to remember, however, is that the IT department is a crucial factor in any business. This is especially true nowadays when all businesses are so reliant on technology and the ability to protect it.
Therefore, the IT department’s role is supporting business operations and growth. One way to do this is to adapt your IT budget pitching so it gets approved. Here’s a few pointers on how to make the approval easier:
1. The IT goals should align with business goals.
While it might be more natural to talk about technology, tech talk will often fall on deaf ears when you’re speaking in front of the board. Cybersecurity issues will stay poorly defined threats until you can present some real numbers.
So instead of simply saying that operations will be safer, talk about risk and gain – how you reduce risk, how the new tech helps in that, and what the business will gain from new tech – in terms of revenue or savings.
2. Skip sheets, use visuals when pitching the IT budget
Use tools that will let you present your data in a way the board will understand. While many IT pros will stick to presenting a sheet with numbers only, these rarely help as it’s hard to visualise the actual impact.
The better option here is to help the board visualise the possible gains. You can use tools that will generate the most important insights as soon as you input all the data and help you prepare charts and visuals that are easy to read and remember.
3. Run possible scenarios
A great way to get the board’s support and attention is the use of your organisation’s real data to present possible future risks.
Instead of just saying there’s a possibility of a data breach, show instead how likely it is to experience a breach and how long it would take to detect it.
Then, present a solution for the breach threat and show the new numbers – how much more unlikely it will become, how much faster you can detect it, and how much less of an impact it will have on revenue.
There are already free tools like Boardish out there that help IT professionals run actual scenarios in front of the board and adjust them at any time, so the board sees the impact of proposed IT changes right then and there.
4. Give them something tangible
The board will often disagree on your IT proposal if you want to implement new tools and software, especially if it’s a big and expensive project like moving to the cloud.
Instead of staying focused on the cost of implementation, you should present them with the cost of NOT implementing such systems.
For example, the cost of keeping your on-premise equipment vs. the cost of moving everything to the cloud. With on-premise systems, there is a much higher risk of breakdowns and downtime than with cloud systems and with cloud you get greater flexibility.
In this scenario, you could explore the need to manually upgrade your on-premise systems, working on implementing redundancy solutions and the cost of overhead and utilities that come with on-premise systems.
Then, you can compare all of that maintenance cost with the cost of moving to the cloud and ongoing costs of using a cloud-based system. This way, the board will see that in the long-run, moving to the cloud will save them a lot of money.
5. Be transparent
Avoid presenting your solutions as the perfect way to solve the issue! The market shifts happen frequently, and so do shifts in the cybersecurity and technology sector. With new technology and threats, you might have to adjust your solution, so make sure the board understands the need to be agile.
GDPR, for example, disrupted the security sector to the very core, with many businesses risking fines because they just weren’t ready for such a shift. Adjusting all operations to new regulatory requirements demands that you have enough leeway in your IT budget to react to such changes on time.
Remember that no matter how good you are as an IT professional, the board of directors are the ones who make the final decisions. Making sure you’re seeing eye to eye with them is crucial in getting your IT budget approved.
So make sure you use all the tools in your arsenal to show them clear visuals. This way, you can present scenarios on how your projects help keep the company safe from threats, reduce risk, and increase efficiency. Most importantly, let them see that IT helps generate more revenue and protect against risk.