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IT Budget Priorities in Perspective

By Pam Baker

At one time, the IT staff's mission was to stay out on the bleeding edge -- first adopter, first adapter, first developer, first to market. But now the frontlines have changed, withdrawing to more cautious ground where bottom-line hemorrhaging can be stemmed and new strategies drawn.

"Without IT and business goal alignment, there is a high probability that IT will be working on implementation projects that are not the top priorities for business," says Andrew Bartels, an analyst with Forrester Research in Cambridge, Mass. "That means that business will be charging ahead, trying to attain its goals without the necessary IT support to achieve success."

The three top IT budget pitfalls, according to Bartels, are:

• Failing to distinguish between IT spending for ongoing operations and maintenance, and IT spending for new initiatives.
• Failing to plan for more positive, or more negative, business results than projected in a coming business year.
• Preparing an IT budget in isolation from the business budget.

"The IT budget needs to be prepared in parallel with the business budget," says Bartels, "with IT costs to support new business initiatives included in the relevant business unit budgets. Also, the IT budget needs to be adjusted based on which new business initiatives that involve IT investment are approved and funded, and which are not."  (article continues)

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