So it's that time of year where we're already thinking about the budget for next year. Our executive director of identity services, Matt Growden, recently spoke on camera about his best practices for creating a budget based on his experiences as a former CIO of a local community bank and then as a virtual CIO for many banks.
One of the biggest questions around budget season is “how do you construct a budget, generally speaking?”
Budgets can be created in a variety of ways. One of the best ways to start, Matt says, is to start with the technology plan. Every bank or credit union has to have some sort of strategic technology plan. It could be a very specific plan that is a rolling plan for three, four, or five years. Or, it could be that technology is addressed as part of the institution's overall strategic plan.
Have a Specific Technology Plan
There are major benefits to having a specific technology plan, which is managed through the technology committee. The technology committee usually consists of different stakeholders, and oftentimes executives, which can give a CIO the visibility that is really needed in order to make the meaningful changes they’re trying to instill in the financial institution.
Talk to Finance
Another strategy for building the budget is to talk to Finance. Determine what the normal yearly operating budget is. Keep in mind, this is going to change year-to-year because there might be certain maintenance agreements that are going to tail off, and other ones that aren't going to tail off. There are also normal depreciation schedules that need to be assessed, pertaining to the assets a bank is buying–PCs, laptops, whatever that may be. But, even with each of these different aspects of the operating budget, there's generally a very good understanding in finance of what is “normal.” Of course, it will ebb and flow if an institution is growing.
But it’s always a best practice to not just have a good relationship with finance, but have a great relationship. Yes, CIOs aren't necessarily accountants, but the more a technology leader can understand about what they're trying to do in the language of finance–how does this translate into monthly expense? How is that going to impact the finances of the organization?--the more buy-in they're likely to get from Finance, and it deepens their understanding of what is being looked at month-to-month and quarterly by the executive team.
For more thought leadership videos by Matt Growden, check out our Vimeo page.