Do you know what your business spends on IT? It's important you keep track of what you buy and when, so you can be sure you're using your cash wisely.
Producing a clear IT budget for the coming year will assist you in several ways:
- It helps you match your IT provision to your business needs.
- It gives you a realistic view of your IT costs.
- It allows you to plan for major expenses.
Setting an IT budget is not a task many people relish, so businesses often avoid it for as long as possible. Try not to fall into this trap, as it can cause problems when you hit major, unexpected expenditure.
Your IT budget and business strategy
Much of your IT budget will be driven by your overall business strategy, so it is important the two are closely aligned.
As your business grows, consider the possibility that your IT infrastructure may need to be altered and streamlined to support your company's expansion and meet changing needs. Regardless of your company's size and maturity, it's vital you have a reliable, scalable and adaptable IT infrastructure in place. Working with an experienced solutions provider from the outset can make the process faster and more efficient.
Having said that, always remember that your IT budget is a forecast, not a plan set in stone. Unexpected items are almost certain to crop up, so leave some wriggle room in case your business moves in an unplanned direction or you experience an unexpected failure of a key piece of equipment.
Keep your IT budget simple
Approach your budget methodically, aiming to build a comprehensive picture of your technology costs:
- Set the scope of your IT budget. For instance, should it include staffing and IT training? If you do not set these boundaries, you may include costs already budgeted elsewhere.
- Keep an inventory. To predict your future IT costs, you need to know what IT is in your business, when it may need replacing, and what the likely maintenance costs are.
- Use past performance as a guide. Previous budgets are a good place to start. If this is your first IT budget, gather anything that can help you. For instance, what do you spend on IT support?
Although ultimate control of your IT budget may rest elsewhere, it is important someone with IT knowledge – perhaps your IT manager – has considerable input. They will best understand the technology itself, like how long hardware can be expected to last and which pieces of equipment are most important.
Monitor your IT costs
Your IT budget is a tool to help you allocate funds and monitor spending.
Set a budget once a year, breaking down spending for each month. Remember to build in regular monthly costs like charges for IT support, cloud services and your internet connection as well as factoring in one-off expenses like new hardware.
Once you've created your IT budget, track your actual spending as you go. Aim to stay close to your budget.
If you've calculated right, your spending will match your projections. However, unexpected IT costs are not uncommon. For instance, new systems frequently overrun expected costs, so build in a decent contingency. Similarly, IT training tends to be costly but important, so don't under budget in that area.
If your IT costs vastly exceed your predictions, or you are spending in different areas, review why. In extreme cases you might need to assess whether your IT spending is sustainable and produce an amended IT budget to see where you can cut costs.
At the end of the year, always review how your IT budget performed and how your business used it. These findings should help you create a more useful, accurate budget next time, so you can focus IT spending in the most important areas.
Given limited IT staff and budgets, you need to make wise decisions as to what you can do best yourself, and when experienced third-parties can do a better job.
Managed services solutions providers can be used to meet the IT, business and budgetary requirements of smaller businesses and other organisations that don't have many employees dedicated to IT. Managed services solutions give businesses the peace of mind that their IT infrastructure will be up to the job of supporting the goals of the company, both now and into the future.