1. Budget Cost Justification

2. What is a Budget Assigning specific amounts of money to specific areas in a fiscal year

3. Key Budget Items Personnel –Salaries, Benefits, Bonus, Training Hardware –Upgrades, Maintenance, New/Replace Software –New, License, Upgrades

4. Key Budget Items (cont) Telecommunications –Lines, ISP, Web providers Supplies –Paper, toner, etc Travel Misc –Books, Memberships, Postage

5. Key Budget Items (cont) Depreciation –Hardware, software Physical Plant –Furniture, cabling Outside –Hot sites Overhead –Telephone, utilities, rent

6. Budget Process Begin 2-3 months prior to fiscal year Get variety of input, viewpoints Defend your budget –Use business terms –Avoid line-by-line Compromise Revision during fiscal year

7. How To Expense Capital Expenditure –Useful life over many years –Depreciation –Listed as an Asset Expense –Value gone in short duration Recurring Cost

8. Lease/Buy Lease –You do not own but –Still responsible for maintenance –Expense only –Termination options: Send back at end Extend Lease Buy Equipment

9. Lease/Buy Lease Advantage –Predictable payments –Limited cash flow –Allows for predictable turnover Lease Disadvantage –Upgrades may not be included –Tracking equipment –Not an asset

10. Budget Key Factors Growth Technological Change Staffing Hardware/Software Maintenance Contracts/Warranties Business Objectives

11. Cost Benefit Analysis Identify cost and corresponding benefits Tangible versus intangible benefits

12. Cost Benefit Acquisition Costs Operating Costs Reduced Expenses Increased Revenue Opportunities Intangible Benefits

13. Overall Budget Objectives Cost Containment Productivity Support Competitive Enhancement