Approach IT Budgeting Like a Financial Planner

Source: Journal of Accountancy

Author Donny Shimamoto suggests that CPA firms should approach the IT budgeting process much like financial planners would, aligning their IT strategies with their business strategies. Among other things, Shimamoto advises firms to:

• Understand their short- and long-term goals, as well as constraints, such as cash flow and overall capital and operating budgets;
• Consider the “human element,” including the impact of IT initiatives on employees' work lives;
• Treat the IT budget as an investment, rather than as a cost center, and examine multiple investment options;
• Ask whether IT initiatives support the firm's strategic objectives;
• Break down the IT budget into its “run, grow, and transform” components;
• Assess the budget's impact on key performance indicators, financial statements, and cash flow;
• Use a “reserve approach” to accumulate cash reserves for high-spending years.

For the complete article, read “A strategic approach to IT budgeting.”

From Journal of Accountancy, American Institute of Certified Public Accountants, November 2011, http://www.journalofaccountancy.com/Issues/2012/Mar.