RUNNING HEAD: BUILDING A SUCCESSFUL BUDGET

Building a Successful Budget

Terresa L. Roulhac
National University

BUILDING A SUCCESSFUL IS BUDGET

Building a Successful Budget

Ever wonder how companies like IBM, Apple, or Samsung are so successful? How are
they able to produce so many different products and continue to bring in enough revenue to stay
competitive in a market that is constantly changing and evolving each day? Each company has
goals that they want to achieve that are targeted towards a certain demographic population. Once
the goals of the organization and vision have been established, the next step is to prepare a
budget that will meet criteria that aligns with the vision and goals. If a company does not have a
strong budget, costs to run certain programs throughout the company can greatly surpass the
amount of funds allocated for a particular program or system. (Laudon & Laudon, p. 529)
According to Shimamoto, the budget must align with the organizations strategy and answer
these questions. Do the selected IT initiatives align with and support the organizations strategic
objectives? Should any initiatives that werent selected for the budget be reconsidered? Would
any of the organizations strategic initiatives make one of the selected IT initiatives obsolete
(2012)? Budgets also must take into account the investments for the company, whether or not
objectives will be met with the new system (Kannan, Jafarian, Khamene, & Olfat, 2013).
There are three main costs associated with information technology. These costs are onetime costs, initial costs and recurring costs. The first cost, one-time, deals with the procurement
of an ILS or a program that once is purchased it is yours to do what you want, keeping in mind
that annual upgrades might be required that would also be a recurring cost in the future. The
second cost associated with information technology is initial cost of items such as computers, or
database access. The last cost that must be taken into account when determining is budget criteria
are those items that will have a recurring cost associated with it. For example, what programs

BUILDING A SUCCESSFUL IS BUDGET

will be needed that do need purchasable updates annually or must be monitored fiscally (Dugan,
2002).
Once goals, visions and cost associated with the budget have been planned out and
aligned correctly, the next step is to determine whether or not the criteria will be linked to one
particular part of the organizational IS budget or the entire budget as a whole. Also, what model
will the organization choose to set as the criteria for the budget? There are a number of budget
models that an organization can choose prior to setting the criteria. If the organization is looking
for the traditional budget where the company once a single expected outcome, then the static
budget is the best choice. On the other hand, if a company wants to have room to adjust for when
sales may be difficult then a flexible budget is best. Other budgets that a company may chose
from include, zero-base budget, which does take a little more time to develop but is most useful
in government agencies. An incremental budget implies that the past is a foreshadowing of the
future. And as soon as one budget period ends another one must start immediately with the
rolling budget. Deciding which budget is best is important in determining how criteria will be
applied to the organizational IS budgets criteria (What are the types of budgeting models?
Questions & Answers Accounting Tools, 2012).

Your article paper must explore organizational IS budgeting criteria/ solutions

What is the purpose of the budget

Types of organizational IS budgets

Companies with smaller budget must make sure that their budget works best for
them.

BUILDING A SUCCESSFUL IS BUDGET

Budget analysis: tying allocations to performance

Budget analysis helps government officials more closely track spending, plan programming
based on projected budget, identify critical un-costed amounts and deliver against budget goals.
To demonstrate results, you can also use budget analysis to deliver a strategic view of revenue
streams, and link program successes to budget allocation, spending, revenues and resources.
With budget analysis solutions from IBM, governments can:

Consolidate data and deliver a strategic view of revenue streams, budgets, costs and expenses.
Use collaborative budget preparation and execution.
Match budget requests to funding and tie spending to results.
More effectively measure and monitor the financial performance of agencies.
Use robust financial reporting capabilities to support compliance with requirements (Budget
analysis: Trying allocations to performance, n.d.).

VFA Capital Budgeting Solution: A 5-Step Approach to a Defensible Capital Budget

Which capital projects should you fund this year, and which should have the greatest priority? Is
it based on need? Or does the squeaky wheel get the grease? Creating a capital budget can be a
very subjective and political process. VFA offers a capital budgeting solution that focuses
decision-makers on the most important business drivers. This solution incorporates sophisticated
prioritization functionality built into VFA.facility with expert guidance from our team of VFA
Capital Planning Professionals. This combination of facilities capital planning and management

BUILDING A SUCCESSFUL IS BUDGET

software and professional experience helps you define and weight criteria for evaluating capital
projects then apply those criteria consistently to create a defensible and automated capital
budget thats in line with your organizational goals and objectives.
Incorporating both proven processes and analytic tools, VFA takes an innovative, five-step
approach to capital budget development, which includes:
Building a Team VFA will create a team consisting of key individuals from your

organization to set goals and objectives; usually, team members include personnel from
Finance, Facilities, Operations, and Executive Management
Creating a Common Understanding - VFA will explain the facility assessment process and

capital planning terminology, making sure team members are up to speed and
comfortable with the program
Defining Prioritization Criteria As a group effort, VFA will assist the team in developing

specific criteria and assigning priorities, all within VFA.facility

Prioritizing Requirements - By means of a series of workshops and the VFA.facility

software, VFA will facilitate the process of ranking facility requirements, emphasizing
how those requirements tie into your organizations priorities
Creating the Budget - Using the criteria established by the team, VFA will produce a multi-

year capital budget within VFA.facility, including capital funding alternatives that
achieve your organizations facility and business objectives
Designed with input from facilities managers and institutional planners, VFAs capital budget
development solution unites the management approach of collaboration and consensus-building
with the science of hierarchical decision-making. This unique marriage not only helps the team

BUILDING A SUCCESSFUL IS BUDGET

make the best decisions in terms of spending and long-term organizational goals, but provides a
defensible rationale for those decisions (Capital Budget Development, n.d.).

RUNNING HEAD: BUILDING A SUCCESSFUL BUDGET

References
Bielec, J. A., & Iadarola, A. (2007). Strategic collaboration: Building a major league technology
infrastructure on a small college budget. New Directions For Higher Education, (140),
111-120. doi:10.1002/he.285
Budget analysis: Trying allocations to performance. (n.d.). Retrieved October 21, 2014, from
http://www-01.ibm.com/software/analytics/rte/an/budget-analysis/index.html
Capital Budget Development. (n.d.). Retrieved October 21, 2014 from:
http://www.vfa.com/products-services/capital-planning-consulting/capital-budgetdevelopment/
Dugan, R. E. (2002). Information Technology Budgets and Costs: Do You Know What Your
Information Technology Costs Each Year?. Journal Of Academic Librarianship, 28(4),
238.
Kannan, D., Jafarian, A., Khamene, H., & Olfat, L. (2013). Competitive performance
improvement by operational budget allocation using ANFIS and fuzzy quality function
deployment: a case study. International Journal Of Advanced Manufacturing Technology,
68(1-4), 849-862. doi:10.1007/s00170-013-4948-3
Laudon, K., & Laudon, J. (2014) Chapter 2 Global E-business and Collaboration. In
Management information systems: Managing the digital firm (13 ed.)
Shimamoto, D. (2012). A strategic approach to IT budgeting. Retrieved October 21, 2014, from
http://www.journalofaccountancy.com/Issues/2012/Mar/20114439.htm
What are the types of budgeting models? - Questions & Answers - AccountingTools. (2012).
Retrieved October 24, 2014, from http://www.accountingtools.com/questions-andanswers/what-are-the-types-of-budgeting-models.html

BUILDING A SUCCESSFUL IS BUDGET