In my life at CIO I have seen different processes for budgeting for IT projects. Not sure there is a perfect model, but interested in what others do and how well it works.  Not referring to base/run costs, how do you budget for new initiatives/projects (i.e. ERP migration, implementation of new application, etc.) ?  1) Are they formally in the IT budget? If so, are they allocated out? What about ongoing depreciation and amortization, where is that located?  How do you dispel the "free rider" syndrome and better match costs with benefits? OR 2) do you budget projects in the function/regional business budgets? If so, how do you keep a level of control over them, from architecture, integration, security, spend, project management, etc.  Does IT still manage the project costs even if the project is business-led? OR  3) Mixed, i.e. depends if the project is directly attributable to a function/region or more ubiquitous? Or do you have a different methodology? 

Like Yvonne I've worked in a couple of ways - I feel my current organization has a good mix, something like this:

- I have a 'Gross' and a 'Net' IT budget to manage - the difference between them being the costs that I re-charge to our business functions

- The Net budget covers all of our IT fixed costs - People, Contractors (Support), Core Infrastructure/Networks/Telecoms, Cyber, End User Devices and the large Enterprise/multi-function software costs (Microsoft, SAP, Veeva etc.). I also keep depreciation for the 'Fixed' Capital Investments

- Business Functions budget for Variable Costs that include all variable/discretionary costs for implementations, and I also pass back to Business Functions the Software costs for specific solutions. At annual planning/budgeting time we collate the Gross costs, and our Finance friends ensure that the chargebacks are properly reflected in the function buckets.

I find this strikes the right balance of putting implementation costs where the value/outcome is going to land, and it keeps everyone's 'skin in the game' on reasons why and the value proposition.

Also gives us the benefit of being able to report "Total Cost of IT" which is the Gross number. 

The downside are the occasional arguments when the 'desired solution' is not from an IT and architecture point of view the 'right solution' and it can lead to the 'well it's my money' conversation - this is where good leadership and cool heads come into play.     

Hi, I've worked in 2 ways.  One where the department/business unit who owns the software includes it in their budget. But also, where the entire costs rests with IT and is then divided out based on users.  I have also seen where a separate project is set up run by operations until it is deployed.  Once deployed the costs are then allocated to the dept that makes the most sense (following either 1 or 2 above).  When the business unit has the budget, they run the project, but I find that if you add in an IT project manager that helps keep the arch alignment and alignment with other IT Process/policies.