3 Tips in Planning Your IT Budget Ahead of Time
The IT function is under more pressure today than ever. The shape of business is changing, resulting in demands for new and improved IT facilities. These include support for remote working, increased information and systems security and perhaps a move to an e-commerce cloud base. Simply put, this has meant a need for an increase in IT capital and operational expenditure. Finance that is perhaps not available now or in the immediate future. Indeed, there are probably calls for a reduction in the IT budget, especially the major component, IT Support Costs .
Preparing a balanced, sensible, and fair IT budget that includes support for these developments is becoming more and more essential to the IT Planning process.
The IT Budgeting Process
Back ion the day, budgeting was a simple process. You took the previous year’s budget, increased it to cover the rate of inflation and added in the costs of any known and planned projects. Simple.
Not so today. All departmental budgets, including IT, are closely scrutinised with the objective of uncovering any potential cost savings. Some departments have been asked to develop a new budget from scratch, thinking that the existing budget is padded with elements that are no longer used or needed.
What was once an afternoon or perhaps a day’s work is now a major exercise. You need to work well ahead of time.
Here are three tips to help you plan your IT budget:
An Infrastructure Assessment
Start by evaluating your existing IT infrastructure, warm body resources, hardware, software, and systems. Identify any outdated or inefficient technology that needs to be upgraded or replaced. Consider your business objectives and growth plans to determine the IT resources and capabilities required to support them. Engage with stakeholders and department heads to understand their technology requirements. This assessment will provide a foundation for creating an IT Support Cost budget that aligns with your organization’s IT needs.
This is particularly important if you intend to move to the Cloud or outsource some functions.
Assign Priorities to the Activities on Your Development Plan
Once you have a clear understanding of your IT infrastructure and its requirements, prioritize your IT initiatives based on their importance and potential impact on your business. Consider factors such as improving security, enhancing productivity, supporting remote work, or upgrading critical systems. Categorize initiatives into essential upgrades, maintenance costs, and strategic investments. Prioritisation will help you allocate funds accordingly and ensure that critical IT projects are adequately funded.
This is where an assessment of outsourcing comes into play. Some routine and non-core tasks could be outsourced to release resources to carry out development tasks.
Looking to the Future and Some Out-of-the-Box Thinking
While planning your IT budget, it’s essential to consider long-term investments and preparing for the future. This is possibly the most important aspect in the budgeting and long-term planning process.
Linked with your development plan, factor in any known changes in business profile and consider how they, coupled with IT developments such as AI, IoT, Big Data and Quantum Computing will affect your IT environment. They are dramatically changing the face of IT and will need new skills and technologies. At the very least, this has an impact on training plans and costs.
So, evaluate the lifespan of technology assets and estimate their total cost of ownership (TCO) over time. Cheaper options may have higher maintenance costs or may need replacement sooner, while higher-quality solutions could provide better ROI and require less frequent upgrades. Consider the scalability of your infrastructure and the potential need for additional resources as your business grows. Remember training costs will need to be included to reskill your existing staff in new technologies. Include the effect on IT Support costs.
Balancing short-term cost considerations with long-term benefits is key to making informed budget decisions.
If you are uncertain about specific technology costs or industry standards, consult with IT professionals or engage with industry peers to gain insights and benchmarking data. They can provide guidance on typical budget allocations for IT infrastructure, software licensing, security measures, and other IT-related expenses. Leveraging their expertise can help you make more informed budget decisions and ensure that your allocations are realistic and in line with industry standards.
Remember, budgeting is an iterative process, and it’s essential to regularly review and adjust your IT budget as business needs evolve or unexpected challenges arise.