Amended Budget Paper - Essay Example

Increase By 4% Amending the IT cost, need to focus on consolidating the operating budget of Riordan Manufacturing. Hence, a 4% increase in spending on IT items related to hardware, software, and outside IT support services, in addition to an increase in outside support charges, capitulate a net increase in spending of $105,100. The 4% increase in IT spending, implies that the annual IT budget, would have to be increased from $1, 901,300 to $1,977,352.In the short term, this implies reducing overheads, like telephone, office supplies, postage, shipping, postage, benefits, and bonuses which amount to $456,358 by around 23 percent.

Raising spending on the baseline figures comprising hardware, software, and outside IT support services, would push services, such as licenses, maintenance, special projects and leased lines, to go up. Therefore, the organization can negotiate for lower licensing and leasing services, in addition to negotiating for cheaper contracts for special projects transactions (Schwalbe, 2010). The increase in spending on items related to hardware, software, and outside IT support service, can be offset by initiating a hiring freeze, but not laying off of current IT department employees.

This is necessitated by the fact that, the organization needs to retain and retrain current staff, so as to be competitive in an environment of increasing reliance on technology. Hence, the IT department staff should now spotlight on ITIL processes, in addition to best practices, in particular change-management advances, plus service-level contract. Over a long period, the increase in IT spending requires to be offset with revenue growth. Therefore, they can consolidate hardware purchasing process, in order to generate an upper return on investment in using technologies.

Decrease in Overall Budget By 2% A decrease in IT overall budget by 2% implies a shift from $1,901,300 to 1,863,274 in terms of total IT spending. Hence, some expenses and their accompanying assumptions require to be re-assessed, in order to change them to be more rational, and in the course, reduce the risk susceptibility to budget over-runs. Notably, not everything in the Riordan Manufacturing IT budget goes to technology, and the biggest item based on the figures, is human resources expenses.

This amounts to 40 to 50% of the whole IT budget, going to salaries, benefits, and bonuses of internal support personnel, such as network personnel plus managers. The whole of the bonuses, benefits, travels, and entertainment amounts to $ 479,158 yearly, therefore, they need to reduce them by 8% percent, in order to offset the $38,026 drop in IT budget. On the other hand, in trying to offset the budget shortfall, the organization needs to be elastic in re-aligning special projects expenditures, from $150,000 to $111,974, a net of $38, 026.

This in turn would easily fill the gap created by the 2% reduction in IT budget. Also, Riordan Manufacturing, can shift from the buying and paying licenses for their business processes software approach, to a Software-as-a-Service, or SaaS model. This implies that, the organization can get customizable business solution at a cheaper annual cost, in order to manage its business