By R. Christopher Haines, Executive VP and Chief Operating Officer

Well, it’s that time of year again. Checking every list twice, making some people’s dreams come true, and completely shattering others — all with the dreaded corporate budget. We all know what a blast budget time can be. Analyzing the current year, getting new quotes on everything under the sun, and all that fun stuff.

Times have really changed. Gone are the days of padded budgets and everyone getting what they want. Ten years ago it wasn’t uncommon for budgets to be pretty much a shoot-from-the-hip procedure. Make your best guess at the cost and put it in there. Put in everything you want and see if it flies. But most companies now dive deeply into almost every line item.

Sure there were companies that always ran with really lean budgets. But there were many insurance companies in the 80s and 90s that ran with really large budgets. Large staffs and high payrolls. Lots of employees traveling to many meetings and conventions in very nice places. Company cars for everyone. Large brick and mortar investments. It now seems like a different world.

Now, everything gets looked at. Things get cut. Not just the excess, but sometimes important things. Tough decisions are made in every company. The big spenders have to find new ways operate, at a lower cost.

Creating almost a perfect storm for these companies, IT-related expenses continue to increase, even while revenues may stay at their previous levels. Companies need to get everything they can out of their IT investments. Additional security, the need for new functionality to keep up with the competition, and additional infrastructure all add costs. No longer is there room on the staff for the employee who is a really nice person but doesn’t contribute anything. The costs of everything around things like failed software implementations cannot be absorbed.

The real perils come when budgets lead all decision-making. Companies often buy the wrong systems by looking at cost alone. Or vendors give salespeople their quotas, which the salespeople meet by cutting all kinds of important things out — most of which aren’t noticed until it’s too late. Or even worse: a company balances its budget by cutting things it really needs, like Internet security or software testing.

A balanced budget is great. The investors and the Board love it. But at what cost? Companies need to find a happy medium between balancing their budgets and appropriate levels of operating costs.

If the operation suffers, someday you won’t have to worry about the corporate budget. You might have to worry about your own.


Image by from USA – Vegan Cashew Egg Nog, CC BY-SA 2.0,