Do you find budgeting for IT challenging? If so, you aren’t alone, and today we’re going to explore how to simplify technology budgeting. With everything from routine IT services to projects, refreshes, and accidents/incidents to consider, it can be tough to prioritize everything and still have funds left over for other crucial matters.
For most firms, technology is a critical component of their business and must be carefully considered when budgeting. If you’re looking to get a better handle on your technology budgeting, here are some tips:
- Break down the current year into quarters and assign each quarter a goal for technology spending.
- Prioritize projects by importance and urgency (cost of downtime or loss of revenue).
- Figure out what percentage of computer hardware is outdated (this will help with refresh planning).
- Assign a budget to each project and make sure it is clearly defined by what you expect to gain from it.
- When allocating funds, consider the various costs associated with each project (training, support, testing).
- Set aside some money for unanticipated expenses (this will help you avoid surprises).
- Schedule a technology budget review meeting once a quarter and adjust spending if necessary.
Assessing Your Business
Assessing your business from the technology perspective can be eye opening. While this can be done by an owner or a single business manager, we always recommend your senior leadership team join the assessment process – there are always hidden places where technology can improve your business operations. Here are some ideas to get your team moving in the right direction:
- Assess the current state of your business.
- Gather information about your company’s strengths and weaknesses.
- Analyze how technology is used throughout the organization.
- Assess how well your current systems support business goals.
- Assess the current state of your cyber security measures and if you are doing enough to protect your organization.
- Determine which processes are the most important to your organization and whether those processes can be improved with technology.
- Identify how technology can help you achieve your business goals (for example, improve customer service, reduce costs).
Covering Your Bases
Now that you have the business priorities documented, it’s time to put some numbers on paper.
- Identify the projects which will impact the business the most (through automation, rebuilding, or eliminating) and get project pricing for these critical projects. Sometimes the biggest impacts from an IT budget are through streamlining old, outdated, or obsolete processes.
- Identify the cyber security projects and ongoing costs which are necessary to protect your business over the next few years. In addition to the basics of updated software, applied security patches, modern firewalls, multi-factor authentication, and anti-virus, consider implementing a managed intrusion prevention and detection solution.
- Identify systems needing hardware replacements. This would include just about everything with a chip in it – from servers to company owned smartphones.
- Be sure to plan for employee/company growth in addition to setting aside some funds for unseen technology circumstances, such as systems suddenly failing or needing replacement before their normal duty-cycle is complete.
Some Final Thoughts
While most CFO’s would agree that budgeting is more science than art, continuing with the “same IT budget” as last year never moves your organization forward. Strive to improve operations, streamline processes, and look for ways to make your team more productive.