"Budgeting" for maximum Initiative success

Effective financial planning is critical for ensuring the success of IT initiatives, particularly when dealing with client hesitations about costs related to replacements and renewals. This article outlines approaches to budgeting within Lifecycle Manager, enabling you to communicate costs and manage expectations with clients, thereby facilitating smoother approval and implementation of IT initiatives.

Understanding Budgeting for Initiatives

Why Budgeting Matters:

Clients often hesitate to approve IT initiatives due to uncertainties around costs. Clear budgeting helps set expectations and builds trust by outlining potential financial commitments upfront.

Adding Budget Line Items Manually

One-Time and Recurring Fees:

  • Manually Adding One-Time Fee Budget Line Items:
    • Applicable to all types of initiatives, this involves entering specific costs related to a singular action or purchase within the initiative. You can choose between a per asset fee or a flat fee structure depending on the nature of the cost.
    • Steps to Add:
      • Enter the details and estimated cost of the line item.
      • Select the appropriate fee type.
      • Repeat the process for each necessary line item.
  • Manually Adding Recurring Fee Budget Line Items:
    • Similar to one-time fees but calculated on a recurring basis. This is especially relevant for services or licenses that require regular renewal.
    • Steps to Add:
      • Input details and the recurring cost.
      • Choose between per asset or flat fee, with the fee recalculated based on the total number of assets involved.
      • Repeat as necessary to cover all recurring costs.

When previewing a proposal, Budget line items are referred to as Investment.

Automating Budgets for Asset Replacement Initiatives

Simplifying Cost Estimations:

In initiatives focusing on asset replacement, Lifecycle Manager automates budget calculations to streamline the process:

  • Budget Automation Rules:
    • The system estimates the replacement cost for included assets using predefined hardware values from the hardware replacement values.
    • If specific client settings exist for hardware replacement, those values are prioritized during calculations.

Automated Budget Line Items Include:

  • Cost of New Hardware:
    • Automatically calculates the cost for replacing workstations or servers based on the action chosen.
  • Professional Services:
    • Adds and calculates costs for professional services associated with the hardware replacement. For servers, this might be set at a percentage of the hardware cost (e.g., 50%), while a flat rate might be applied for workstations.

Example Calculations

Asset cost calculation:

  • Formula: Cost = Hardware Replacement Value * Number of Assets

Professional Services Cost Calculation:

  • Server Example:
    • For replacing three servers each at $3,000, the Professional service cost is set at 50% of the cost of the new server(s), totaling $13,500.
  • Workstation Example:
    • For replacing twelve workstations each at $1,500, default professional services cost is $250 USD per workstation, totaling $3,000, with a combined total of $21,000.

Additional articles to read