Bob Woolley talks about budgeting by deliverables from Dean Meyer:
Budget-by-deliverables is simple in concept. A successful budget process requires crystal-clear definitions, across-the-board activity-based costing, and consistency across all groups in the organization. This might be an interesting way to look at IT budgeting in State government. See http://www.ndma.com/products/em/bbd.htm [Bob Woolley's Technology Weblog]
I read through this a while ago as well and it made great sense to me. Dean says:
Budgets should be presented in a different way. The organization should total the rows, not the columns. This is termed "budget-by-deliverables," distinct from budgeting by cost factors.
Seems simple enough, but I think it requires a cultural change in the whole organization to make it fly.