2010 Budgets: Think Layers, Think Scenarios

Michael Wood - July 21, 2009 Will the recovery come in 2010?  Will capital spending resume?  Will IT budgets get an infusion?  Who can tell?  In a recent Gartner Group poll of 900 CIOs, 2009 budgets declined about 4.7 percent (2).  Those same CIOs have mixed opinions regarding a recovery with 32 percent expecting a recovery by March 2010, 38 percent by September 2010 and 24 precent not seeing any recovery until after September (3).   This only goes to illustrate the amount of uncertainty facing the economic outlook going forward.  Most likely, when the recovery comes, CIOs will be in a catch-up mode, and thus need to have plans in place to adapt to probable future events.

So when it comes to planning your budget for 2010, consider presenting one complete with options and variables based on various business specific, economic scenarios. 

Here are some tips on producing a flexible budget to management that focuses on aligning spending to economic realities and probable possibilities.

Begin with a Baseline Budget
As the song from “The Sound of Music” goes, “Let’s start at the very beginning, because it’s a very good place to start.”  When it comes to budgeting for 2010, the most likely beginning is the 2009 budget that has most likely been cut to the bone.  The basic assumption here is that, except for …

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