As Budget 2024 is delivered from the Dáil, many are busy assessing its implications on their finances. Meanwhile, the arrival of Q4 turns the minds of Chief Information Officers (CIOs) and IT Managers toward their departmental budgets for the upcoming year.
We consulted our Chief Financial Officer, Gina Laverty, and Group Financial Controller, Niamh Mangan, for the view from the other side of the table. Let's gain their valuable perspective on how IT leaders can position themselves for success when presenting their budget proposals for the coming year.
1. Simplify the language
Gina and Niamh have become familiar with the terminology of comms and digital services since joining Viatel. They still emphasise the importance of avoiding technical jargon during budget discussions. Gina aptly highlights that every business and department has its own unique terminology, making it crucial to communicate clearly. Presenting an acronym-laden document is unlikely to work in your favour. Gina warns,
"At worst, your Finance Department may suspect you of trying to confuse them. At best, they won't understand your objectives. Clear, simple language builds transparency and trust, an ideal foundation for discussion."
2. Highlight the benefits
Tech budgets often comprise recurring costs, predominantly in the form of subscriptions and licenses as more and more solutions are offered as a service. In the absence of major change in ongoing expenses, the focus will be on any significant project costs. Niamh advises, "During budget discussions, your financial leaders will naturally scrutinise project costs. However, they are equally concerned with the overall value and efficiency of the company, as well as our ability to achieve revenue, margin, and other targets. Your challenge is to not just present the costs but also ensure we see the associated benefits."
Gina concurs and stresses that these benefits must align with the company's strategic goals to maximise the chances of approval. "Budget items are always proposed in good faith and have merit in their own right. But not everything can be approved. Projects that are closely aligned with our company's goals and strategic vision are more likely to succeed."
3. Address cyber security and compliance
Many IT leaders will seek increased cybersecurity spending for the upcoming year, a trend anticipated by Gartner, with worldwide security and risk management spending projected to reach $215 billion in 2024, a 14.3% increase from 2023 .
Financial leaders may well anticipate this spend. Gina says, “Cyber security is an area your CFO will be very aware of. Management teams and boards now all have responsibilities in this space. Many continuous improvements in our own organisation are driven by compliance with voluntary standards such as ISO 27001. Others are prompted by regulations, or the anticipated introduction of legislation, such as NIS 2. Outside of regulations, advancing your security may lower the cost of cyber insurance for the coming year. All these are powerful arguments in your favour.”
If your CFO is not as open to spend in this area as you would like, you may need to educate them about potential implications such as the cost of breach. Gina concludes, “It is important that company leaders are fully informed of the real challenges around cyber resilience. In most organisations, security will already be a high priority topic at C-level.”
4. Consider the human cost
Does your plan include adding personnel to your team? Depending on your organisation’s workforce planning, this is a line item likely to be up for discussion. Niamh attributes this to Finance’s awareness of the full cost of adding staff. “It’s not a straightforward question of salary, there is also Employers’ PRSI, pension and other benefits.” Additionally, recruitment costs may be high as tech talent remains in demand. HR will need resources to attract the right people to your in-house team or may call on the support of an external agency with associated fees.
Gina reflects on the financial implications of enhancing benefits for employees, citing the recent improvements in pension plans at Viatel. “These improvements are the right thing to do for our team and align with our values and culture but they do come with financial implications for the company. After strategic investments in infrastructural projects, adding headcount is probably the budget line item with the most ramifications.”
5. Automate IT
According to Forbes , 2024 is set to be the year of everyday automation. Gina sees real potential for IT leaders to make a case for spend rooted in automation and efficiency. “Improved ways of working should be a priority across organisations. This is an area where savings can clearly be demonstrated and make a long-term impact on the bottom line.”
This isn’t about avoiding the headcount already mentioned either. “This isn't about bringing in the robots. It's about positive changes in working lives. Automation transforms how people work. When you free your team from menial, repetitive, tedious tasks, you make them available for higher value, infinitely more rewarding work.”
6. Negotiation: you go high, we go low
Is budgeting ultimately just a negotiation where, eventually, finance and IT meet in the middle? Niamh admits there is an element of negotiation but believes there are two main reasons a manager may inflate figures in their departmental budget, “This often occurs when the costs of a project are uncertain or challenging to determine. Managers naturally want to make sure they have a safety net or room for manoeuvre if costs trend higher."
“Secondly, I think there can be a feeling that if a department asks for a lot, Finance will have to give at least some of what they ask for. We don’t!” she jokes. “When a department demonstrates that a cost has been carefully calculated, that will instil confidence in their finance team to approve it and confidence that the departmental budget as a whole is a realistic cost basis for the year ahead.”
Gina Laverty is Chief Financial Officer (CFO) with Viatel Technology Group. Gina joined Viatel in 2021 from her role as Senior Vice President for International Finance with Global Payments.
Niamh Mangan is Group Financial Controller with Viatel Technology Group. Niamh joined Viatel in 2022 having previously served as Audit Director with KPMG.