Most organizations perform planning of IT activities once a year, freezing IS development budget for the rest of the year. However, given the dynamic nature of markets and competition, planning IS developments in such a way is limiting, causing a business-IT divide problem. Some organizations keep a fraction of the annual budget as a reserve for unplanned IT needs, leading to ineffective use of budgets. In this paper, we propose a new business-IT development and budgeting process model, which solves the effects caused by the business-IT divide problem, enables variations in the development plan and dynamic reactions to environmental changes.

information technology budgeting, agile development model, business strategy, information technology strategy, software development life cycle.