Budgeting 3.0

Budgeting solution has to be installed only using guided services. Please contact us to enable this solution on your account.

After the solution is installed and configured, it can be extended by the following solutions:

• Proposed Budget based on Work Allocations - to calculate Proposed Budget using Teams or ARTs Work Allocations
• Proposed Budget based on Headcount - to calculate Proposed Budget using Headcount of defined Job Profiles needed in specific Locations considering Blended Rates
• Budgeting: Proposed Budget Manual Entry
• Work Cost based on Time Records Cost - to calculate Actual Costs based on Time Record Costs

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Solution Overview

The solution supports funding Portfolios and further Work, People or Products, as well as allow tracking proposed budget and actuals.

There are the following phases of a budgeting process, which are covered by Budgeting solution in Apptio Targetprocess:

• Budget Target - describes the company's initial idea of distributing funds across Portfolios and defining guardrails (Run vs Grow, CapEx vs OpEx).
• Budget Proposal - describes budgets proposed by Project Managers, Product Managers or Portfolio Epic Owners based on the funds needed to implement Portfolio Epics, Value Streams, Solution Trains, Agile Release Trains or Products.
• Budget Approval - comparing the numbers in a Budget Target and Budget Proposal reflects the final decision on the investment into each Portfolio.
• Actuals - shares information about labor and non-labor expenses related to a Portfolio and Portfolio Epics, Value Streams, Solution Trains, Agile Release Trains, Teams or Products.

The solution enables the structure of Budgets, which allows funding Work, People or Products and see Proposed Budgets and Actuals for any of them.

Solution Flow

Step 1: Set Budget Targets

Budget Target describes the company's initial idea of distributing funds across Portfolios and further between lower level items, such as Portfolio Epics, Value Streams, Solution Trains, Agile Release Trains or Products. It's done based on the company vision and strategy for the following year's top-down. It answers the following questions:

• How much do we plan to invest in each Portfolio?
• How will this be distributed further?

Portfolio Owners usually perform budget targeting. Their main goal is to split the Target Budget across different Portfolios, define guardrails, and set what percentage of capitalization should be headed to, as well as the grow and run targets.

Portfolio Owners will handle planning on the Budget Targets dashboard, where you enter a Target Budget for a Portfolio and then for each Portfolio Epic, Value Stream, Solution Train, Agile Release Train or Product (Portfolio Epic as an example in this article).

Target CapEx and Opex (Percentage) define desired capitalizable and non-capitalizable expenses. Target Grow and Run (Percentage) – desired Run vs Grow expenses percentage on a Portfolio and each Portfolio Epic (Project), Value Stream, Solution Train, Agile Release Train or Product. 

Target Budget In Scope for Portfolio is a sum of Portfolio Epic (Project), Value Stream, Solution Train, Agile Release Train or Product Target Budgets. It's used to see if we distributed the total Portfolio Budgets properly and didn't over or under-plan it. It will be highlighted in red if the sum of Portfolio Epic (Value Stream, Solution Train, Agile Release Train or Product) Target Budgets will be more than a Portfolio Target Budget, meaning we have planned to distribute more funds than available.

You can also enter the numbers on a Portfolio Annual Budget detailed view -> Budgeting tab:

Portfolio Epic Owners, Product Managers or Value Stream leaders will see and can update the information about Target Budget of a specific Portfolio Epic on a Portfolio Epic Annual Budget view (or Value Stream, Solution Train, Agile Release Train or Product).

Step 2: Budget Proposal

Budget Proposal is provided by Portfolio Epic Owners, Project or Product Managers or Value Stream Leaders and includes information on how much funds are needed to implement a Portfolio Epic (Value Stream, Solution Train, Agile Release Train or Product) in the upcoming Year.

 It answers the following questions:

• What resources are needed to implement a Portfolio Epic (Product or work planned for Value Stream, Solution Train, Agile Release Train, Team)?
• What are the forecasted funds for Labor Costs and necessary Non-Labor Expenses?

There can be different ways of calculating a Proposed Budget: based on User and Team Work Allocation, Headcount, Portfolio Epic estimates, or other parameters (using additional solutions), or manually entered in this solution if the numbers come from another system or are approximately guessed.

The Proposed Budget consists of a Proposed Labor Budget and a Proposed Non-Labor Budget (defines expected non-labor expenses, such as Software, Hardware, etc.).

Budget Proposal - Labor

The Proposed Labor Budget usually reflects how much money is needed for labor expenses. Here you can use one of the following solutions:

• Proposed Budget based on Work Allocations (b82de5e7-4b6e-48b0-aa7c-c533d423711a), where Project Managers would create User, Team and/or ARTs Work Allocations, defining the needed people for a project, desired period and percentage.
• Proposed Budget based on Headcount (22c6f9f4-9d5e-49d3-b9cc-c3bc025d245b), where Project Managers would define the needed annual Headcount (number of people of required Job Profiles and Locations), and Forecasted Cost will be calculated based on Blended Rates.

Calculated Costs will be distributed across Portfolio Epic (Value Stream, Solution Train, Agile Release Train or Product) Monthly Budgets and roll up to Quarterly and Annual Budgets. Thus, we'll see the Proposed Labor Budget on a Portfolio Epic (Value Stream, Solution Train, Agile Release Train or Product) Annual Budget.

Budget Proposal - Non-Labor

The Proposed Non Labor Budget will be formed based on the Expenses Proposed amount. First, you'll create the estimated Non-Labor Expenses, defining the needed amount. The Expenses will be connected to the respective Month, Quarter and Year and be shown as a total Annual Proposed Non-Labor Budget.

Step 3: Budget Approval

Comparing Target Budget and Proposed Budget for each Portfolio on a Budget Approval dashboard, Portfolio Owners decide if they will go with the initial Target Budget or increase/decrease and distribute it differently across Portfolios. 

Further, the budget is distributed across Portfolio Epics (Value Stream, Solution Train, Agile Release Train or Product). In the Approved Labor Delta and Approved Non-Labor Delta fields, you can see the difference between a budget approved for the Portfolio and the total budget approved for Portfolio Epics (Value Stream, Solution Train, Agile Release Train or Product) in the Portfolio so that you know you approved the correct total budget across Portfolio Epics (Value Stream, Solution Train, Agile Release Train or Product).

There can be a situation where a Portfolio Epics (Value Stream, Solution Train, Agile Release Train or Product) Proposed Budget is much higher than a Portfolio Target Budget. Portfolio Owner needs to decide whether we will go with the suggested scope and increase a Portfolio Budget or decrease the scope by removing some Portfolio Epics from scope.

On the same dashboard, you can also check whether Target Portfolio Guardrails match the planned Portfolio Epics (Value Stream, Solution Train, Agile Release Train or Product) CapEx/OpEx and Run/Grow parameters.

Step 4: Actuals

Costs represent Labor Costs. They can be calculated based on spent Hours and people rates, imported from a different financial system or entered manually. The Costs will be split into CapEx/OpEx, and Run/Grow to see aggregated by each category for a Portfolio Epic (Value Stream, Solution Train, Agile Release Train or Product) and a Portfolio.

Expenses represent Non-Labor Expenses. You'll enter Actuals, which will also be split by the above categories.

The total Actuals will be aggregated for each Portfolio Epic (Value Stream, Solution Train, Agile Release Train or Product) and a Portfolio by Month, Quarter, and Year and can be viewed on the Actuals dashboard. Here you can focus on a specific Year, Portfolio or select a Portfolio Epic (Value Stream, Solution Train, Agile Release Train or Product) to focus on the details.

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Version: 3.0