7 IT Budget management secrets

These seven IT budget management tips will help CIOs to optimize their IT budget spends and obtain high business value from their IT implementations.

Ideally, an IT implementation should be done to meet business needs, and not merely to keep up with the latest technologies. There is little business sense in implementing a technology simply because it is in vogue at the moment. To optimize your IT budget, cost factors such as manpower, platform, hardware, daily operations, and quality management should be considered first when making your IT budget allocations.

Presented here are seven tips to optimize your IT budget:

1) Share manpower resources: Sharing manpower resources is a very effective way to optimize your IT budget. For example, at Bharat Petroleum Corporation Limited (BPCL), a project manager is typically responsible for six different projects, and his cost to the company is shared out between those six projects. So a manager who handles the real-time database is also responsible for managing the business performance management (BPM) system, and so on.

2) Share common infrastructure: Renting your company’s infrastructure to sister concerns is another way to optimize the IT budget. For example, hardware from Bina Refinery, a group company, is hosted in BPCL’s datacenter. It’s a win-win situation for both. The arrangement helps Bina to reduce its infrastructure costs, and BPCL earns revenues through rentals.

3) Consolidate databases, applications: Application and database consolidation can bring down IT budgets considerably. Multiple company databases can be consolidated into one. For example, at BPCL, we have integrated the Manufacturing Execution System (MES), a third party software database, with our homegrown system databases. However, note that since different databases are managed by different teams, effective consolidation will require detailed planning.

4) Follow standard processes and best practices: Following best practices and standard processes is a good way to manage your IT budget. It ensures accuracy and prevents overspending. If the best practices for process documentation and version control are consistently adhered to, a lot of time and money can be saved during project execution. At BPCL, we adhere to the COBIT process guidelines.

5) Leverage the in-house IT talent to create revenue streams: Providing IT services to sister concerns can help your IT team to generate revenue. This can be another effective way to optimize IT budgets. For example, 80% of the SAP deployment work at Bina Refinery was done by BPCL’s SAP team. Moreover, the project cost the group only about 60% of what an external implementation company would have charged.

6) Take a long-term view to infrastructure planning: The initial investment for a good hardware and storage network might be high if you are investing from a long term perspective. But this is critical for the smooth running of applications as your business scales up; otherwise, you may end up over-spending on IT components and maintenance later. For instance, an enterprise may consider investing in a fat server with an estimated life span of 10 years, SAN storage network with appropriate backup policies as good long-term choices. Your IT budget is better managed by aiming for long-term benefits rather than short-term savings.

7) Replicate your learnings: Preserve and replicate the learnings wherever you can within your company or group. For example, once a system is successfully implemented at one location, the implementation can be easily replicated at other locations. Since the staff is already trained, it saves time and costs. This is a significant source of IT budget savings.

About the author: MD Agrawal is deputy general manager -- IS (Refinery) at Bharat Petroleum Corporation Limited (BPCL). He has over 27 years of experience in strategic IT planning, IT budgeting, project leadership, and vendor management.

(As told to Anuradha Ramamirtham)

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