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Elements of Effective IT Planning

Apr 30, 2017 | By Randy Foley

Cost Optimization Planning, Budgeting & Forecasting

An important component of successful IT planning, budgeting and forecasting is the ability to align top-down financial targets with bottom-up plans. Some organizations establish top-down targets and then turn the annual budgeting process, along with a mandate to meet those numbers, over to IT or corporate finance. Other organizations require detailed, bottom-up planning, and then rollup numbers at the top, so that the plan meets strategic targets. Neither of these approaches results in planning excellence. Instead, IT organizations should provide initial guidance from senior management’s top-down perspective on strategic goals, objectives, and expectations. Then, department, branch, and line of business managers can build a plan from the bottom-up, indicating how each intends to meet established goals. The process requires recurrent versions for these approaches to meet and be reconciled.

The result is a plan that is supported by:

  1. Managers, because they helped create it and will be rewarded for meeting it.
  2. Senior management, because operational goals are aligned with strategic goals.
  3. IT and corporate finance, because they add value to a productive, collaborative effort, rather than demanding participation in a worthless exercise.

Not only should strategic and operating plans be aligned, but plans between different regions and functional areas should also be coordinated. Best practices include direct involvement by portfolio and line of business managers from across the enterprise along with a collaborative approach to budgeting and forecasting. In addition to understanding strategic goals, managers also need to know what other functions are involved in planning. For example, in an insurance company that is planning a new claims system rollout, marketing needs to increase advertising, and customer service representatives need to be trained. But the plan should also consider new headcount, computer systems, and so on. Such collaborative planning can be accomplished through an iterative process that lets managers forecast and share alternative scenarios. IT finance plays a key role in facilitating the coordination of plans across the IT organization, which helps ensure that operational tactics are aligned with financial targets throughout the organization.

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