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The budget for the IT initiatives was developed by the parent company. The branch in operation in the US had made a proposal for a total of forty projects which at estimation would require up amount to a tune of $210 million.
It was anticipated that the finances could be provided by the mother company in Germany. A mechanism was put in place and before the funds were released they had to be approved first.
This approving led some of the projects dropped and probably modification made to some. The process of approving which projects were to be dropped, modified and finally funded was quite detailed and involved a number of offices and several representatives from the various project units (Austin, Ritchie & Garrett, 2007).
Control of Budgeting
It is worth noting that the Next Round of Growth (NRG) was controlled by executive officers and representatives from the IT departments. The NRG was required to steer the VWoA to the next level of growth hence the need for close cooperation with various departments.
The presence of an IT representation in the NRG program was meant to assist in ensuring that the IT initiatives were accorded all the necessary support and that significant initiatives were not dropped unnecessarily. There was also the Program Management Office (PMO) which was meant to harmonize the projects and ensure that the prioritization was done in the correct way.
This was very significant as it was a step to ensure that funds were allocated in the right way and to the right projects such that the object of the NRG program could be achieved. Another element that played a significant role on the issue of funding was the Digital Business Council (DBC).
The DBC had representation from the various e-business units. In regard to who controlled the financing of the VWoA, it is clear that a number of people played significant roles in controlling process. All the teams that were involved had significant roles that they played in the funding process.
Who should control the Budget?
I believe that a corporate budget should take into consideration all the units within the corporate body. One way of ensuring that all the units are considered carefully is to carefully make a representation of all the units in the team that will oversee the drawing of the budget.
By having all the units represented in the budgetary control committee or team, it is possible to avoid overlooking aspects which may undermine the productivity of the company. It is worth noting that in times of financial constraints it will be very significance to have the representation of the various departments as it will be possible to practically come up with the lowest amount that a business unit can operate with.
The department unit representative will give the lowest budget estimation under which the department or unit being represented can operate without necessarily affecting the productivity of the whole firm. I believe that such estimations are very good especially during financial hard times when reductions in budget has to be carried out.
By consulting the various heads, it becomes possible for the reduction to be carried out in a manner that will not affect the business units as well as the whole company in general. Therefore, budget control should not be a reserve of the top executives but rather an activity that should be shared by the various heads of a company. Similar ideas have been proposed elsewhere (Blocher, 2005).
As pointed above, there is a need for collaboration when budgetary issues are discussed. In regard to that, it therefore will not be wise that the IT unit should have its own budget per se.
The IT unit should make its own estimation which at all times should be in line with the company objectives but again it should be noted that these estimation should be subjected to modifications under the directions of the IT unit heads in collaboration with the head departments (Budgeting, 2011).
Austin, R. D., Ritchie, W., & Garrett, G. (2007). Managing IT priorities. USA: Harvard Business School.
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Blocher, E. (2005). Cost management: a strategic emphasis. New York, NY: Prentice Hall.
Budgeting. (2011). Budgeting: Planning for success. Retrieved from https://www.principlesofaccounting.com/