Modern Middle Manager
Primarily my musings on the practical application of technology and management principles at a financial services company.
It's Budget Time

Wednesday, December 04, 2002  

I always get energized budgeting for my department. Why? Because deep down, I am a frustrated writer. It is only during the budgeting season that I can exercise the imagination and vision equal to the famous Russian novelists, bringing forth a piece of dense fiction like no other. I will not lay claim to "epic" status, though I will state for the record that my efforts have yielded the sixth volume in this yearly saga.

Our fiscal year is the same as the calendar year. The fun begins about 6-12 weeks before the end of December. It consists of four parts: salaries, capital expenditures, expenses and revenue, in that order. Department managers create their budgets and then senior management rolls them up into a single budget. The astute among you (and you know you are) may ask the question, "How can you create the expense budget for the company before you know how much revenue you will generate?" That is because you are constrained by such trivialities as the laws of mathematics and logic. We practice what I would dub "postmodernist budgeting," except that we try really, really hard to drop the context as well. Perhaps it is an exercise in existentialism, where the existence of the numbers precedes the essence of their meaning?

Numbers without context are dangerous (duh). If, for example, our CEO reads that "financial services companies are reducing their IT budgets by 50%" without asking the questions "why?" or "how?" or "how much were those budgets growing over the last three years vis-a-vis our company," then he plays a game of data Russian Roulette. It doesn't become useful information until given some background, which of course forces me to start digging up some industry metrics (a difficult task when you can't pay for quality research -- it's a lot like dumpster diving through Google). Fortunately I was able to make some comparisons between my company and the banking industry as a whole with metrics from a META Group report. Comparisons are below:




IT Spending as a Percentage of Revenue:



IT Support Personnel / Total Personnel:



IT Spending per Employee:



These give my department's budget numbers some concrete existence rather than the belief that I pulled them out of some nether orifice or (let's be pretentious) created them ex nihilo. I am a traditionalist in a budget theater of the absurd.

posted by Henry Jenkins | 12/04/2002 01:05:00 PM

Comments: Post a Comment
the author
open source