[ITFM#9] How to Budget IT: A Real-World Use Case from BG&A

Introduction: A Common Challenge

Budgeting for IT is one of the most strategic, yet challenging tasks finance and technology leaders face each year. It’s not just about allocating money—it’s about making informed decisions that align IT spending with business priorities, anticipated growth, and evolving digital strategies.

But where do you start when your IT landscape is large, complex, and constantly changing?

👉 Discover how BG&A tackled this challenge for an enterprise client facing these exact challenges, with hundreds of vendors and eight- to nine-figure spending—and learn how you can apply the same approach in your organization.

🧩 Why IT Budgeting Matters

An IT budget isn’t just a list of expenses — it’s a financial blueprint that supports strategic decision-making, ensures resource availability, and communicates IT’s value to the business. Without a structured budget, organizations face:

·       Inaccurate forecasts and unexpected overspending

·       Poor visibility into cost drivers

·       Inability to fund innovation or respond to demand

·       Difficulties justifying IT investments to stakeholders

🛠️ The BG&A Approach: From Actuals to Action

Our approach centered around building a transparent, data-informed budget that aligned with both financial goals and operational realities.

Step 1: Understand the Budgeting Models

Before diving into the numbers, we clarified the different approaches to IT budgeting. The most common ones include:

·       Incremental Budgeting – Adjusting last year’s numbers up or down

·       Zero-Based Budgeting (ZBB) – Starting from scratch and justifying every line item

·       Activity-Based Budgeting – Budgeting based on the actual services or projects delivered

·       Hybrid Models – Combining elements of the above

In our client’s case, we used a hybrid approach: we started from previous actuals but questioned each item with the logic of ZBB and added drivers from upcoming business activities.

Step 2: Start with the Actuals

We gathered and cleaned the previous year's actual spend data. This served as our baseline. But instead of copying it over blindly, we:

·       Conducted trend & variance analysis to identify patterns and anomalies

·       Removed costs for decommissioned or unused services

·       Assessed contracts that were ending or due for renewal

·       Identified one-time vs. recurring costs

Step 3: Engage Stakeholders Early

Budgeting isn’t a spreadsheet exercise — it’s a collaborative planning process. We worked closely with department heads, procurement, and key IT owners to gather:

·       New business demands and growth projections (e.g., expected cloud usage increases)

·       Upcoming projects requiring IT investment

·       Planned contract renewals or expansions

·       Potential savings initiatives, and risks

This collaborative approach ensured that the budget reflected reality — not assumptions.

Step 4: Build in Agility

No budget survives contact with reality unchanged. We use mechanisms for continuous planning and adjustment:

·       Monthly actuals-to-budget tracking

·       Quarterly Planning Reviews (QPR's)

·       Clear accountability for each cost center

This turned budgeting from a once-a-year headache into an ongoing governance process — and helped the client stay in control.

🔍 Lessons Learned - and How They Can Help You

What’s Possible When Done Right:

·       Ensure IT spending reflects strategic priorities

·       Spot cost-saving and risks potential early

·       Strengthen the partnership between IT, Finance, and the business

What Can Go Wrong Without the Right Approach:

·       Budgeting based on outdated assumptions, leading to big gaps

·       Overlooking new cost drivers like cloud growth or vendor changes

·       Planning in silos, causing friction, misalignment, and overspend

Bottom Line:

IT budgeting isn't about getting every number perfect — it’s about creating transparency, enabling meaningful conversations, and staying in control. When it works, budgeting becomes a lever for innovation, not a barrier.

💬 Ready to Rethink Your IT Budget?

Still relying on last year’s estimates to shape your IT budget? What if you had a process that delivers real insight, clear visibility, and stronger alignment? For one client, BG&A helped cut budget variance by 10.3%.[ME1] , and identified significant opportunities and risks to act upon.

Let us know how your organization handles budgeting. What works? What doesn't? We’d love to hear from you in the comments.

👤 Authors: Maltrim Ebipi, Junior Associate ; Alexandre Gay, MD and Head of Delivery at BG&A

Join the Conversation!

At BG&A, we specialize in IT Financial Management, cost optimization, investment cases, and TCO analysis. This article is part of our ongoing newsletter to help organizations master IT financial governance.

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🔹 Warm regards, 

The BG&A Team