How Setting Assumptions Helps IT Managers To Create Budgets

by drjim on May 17, 2012

Image Credit A good IT budget requires that you make some assumptions about the future

A good IT budget requires that you make some assumptions about the future

Creating an IT budget for your team sure sounds like a daunting task, doesn’t it? It can be; however, we can take some of the challenge out of this task if we start in the right place. The correct first step that you need to take when you are creating an IT budget is to show some leadership by sitting down and writing out some assumptions.

How Do You Create Assumptions?

Before we go getting all caught up in creating assumptions to help you with your IT budgeting process, perhaps we should have a chat about just exactly what an assumption is. In a nutshell, an assumption in this case is a guess about what you think that the future will look like.

When you are making assumptions in order to help your budgeting process, you are going to have to think about and come up with answers to a number of different questions. These include what your company’s internal departments are going to be requesting from your team in the upcoming year in terms of both new and existing IT products and services.

Next, every IT team is served by a group of suppliers. These can be hardware, software, or perhaps even staffing companies. You are going to have to peer into the future and decide if you think that their prices are going to either rise or fall over the next year.

One key assumption that every IT manager needs to make is in regards to their ability to retain their team. What do you think the employment situation is going to be like over the next year? Are you going to have people leaving for better opportunities or will everyone be staying because there’s no place else to go?

Finally, what is the upcoming year going to look like for your company? Is the company going to have to worry about competitors grabbing more market share? If so, what is this going to mean for the IT department and for your team?

You’ll need to talk with knowledgeable people within the company in order to come up with a good set of assumptions. Your ability to communicate and coordinate your actions with others will play a key role in your ability to create a good list of assumptions.

What’s The Best Way To Create Assumptions?

So if creating assumptions is a key part of your ability to develop an IT budget for your team, what’s the best way to go about creating your assumptions? We can all learn lessons from the past. This means that you can use historical data as a good starting point for developing your assumptions. This will provide you with a base to start from.

Ultimately you are going to end up making a series of guesses about how you think the future is going to turn out. You are going to have to trust your own instincts here.

Understand that you have some homework to do. You are going to have to sit down and perform some research. This may be as simple as seeking out the people who have the information that you need or it may require you to do a lot of reading.

Every assumption is going to come with a set of risks associated with adopting it. You are going to have to make a decision about each assumption: do you want to risk going with it or should you play it safe?

Finally, every assumption that you create needs to be tested. Look for ways to conduct experiments and see if your assumption holds up. If it doesn’t, then revisit the assumption and determine what needs to be changed.

What Does All Of This Mean For You

When your management asks you to create an IT budget for your IT dream team, it can easily appear to be a very large and complex task. In order to transform this into a more manageable task, start off correctly by first creating a list of assumptions.

The best way to create assumptions that will help you to create an IT budget is to answer questions that will require you to get information from sources that have the best information. We’ve discussed a number of different ways to make sure that the assumptions that you are creating are going to help you when it comes time to create your budget.

Some would argue that one of the most important tasks that an IT manager does is to create the budget that will fund his or her team over the next year. In order to complete this critical task correctly, you need to first do a good job of creating valid assumptions. Do this well and you’ll be on your way to creating a very good budget.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Management Skills™

Question For You: How many assumptions do you think that you should make? Do you think that it is possible to make too many assumptions?

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What We’ll Be Talking About Next Time

One of the most important parts of being an IT manager is your ability to create an operating budget for your team. In order for your team to be able to accomplish everything that is expected of them, there will be costs and they’ll do things that (hopefully) generate revenue for the company. If you can show some leadership and get this operating budget right and convince your management to provide your team with funding then your team will have enough fuel in their tank to make it through the year, get it wrong and you’ll end up sitting by the side of the road…

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