Setting an IT budget - checklist

A woman is pricing up different mobile devices to work out which will offer the best value.

Most businesses rely on some form of tech to keep running - but it's easy to underestimate costs and get a nasty shock down the line. Read our checklist on what to consider

  • Examine your spending in previous years. Even if you haven't bothered with a formal IT budget before, this gives you an excellent baseline. You can also use your previous spending to check your final budget.
  • Remember: it's just like any other budget. The techniques for setting budgets in general apply equally well to IT budgets. Apply the same principles and you won't go far wrong.
  • Define the scope of your budget. For instance, should it cover costs for tech support staff and training, or do those items come from different budget lines?
  • Talk to experts and other small business owners. It's easy to overlook or underestimate IT spending in key areas like support and backups. If you already have a trusted IT supplier or support company, ask for their input.
  • Calculate your hardware costs. How much does your existing IT equipment (PCs, mobile devices, servers etc) cost to maintain each year? Regular maintenance is essential if your IT is to run smoothly, so make sure you make adequate provision in your IT budget.
  • Calculate your software and app costs. How much do you spend on your existing software each year? Remember to budget for any monthly fees for software or cloud services.
  • Consider where you can make additional savings by using cloud services and apps to replace hardware and software and to facilitate flexible working. For example, can you replace your aging server with cloud data storage.
  • Consider further investment. As technology changes, new services or devices such as smart devices may offer benefits. Look at costs carefully and factor in installation and maintenance fees.
  • If you're looking for bespoke systems, ensure you have contingency funds for extended testing and back-up procedures for any down periods.
  • Don't forget about routine upgrades. The typical lifespan of a computer or laptop is three years whilst smart devices are likely to have a shorter lifespan as newer technology is released.
  • Make sure you've budgeted adequately for equipment and software. Some software packages and most cloud services include upgrades as part of a regular monthly cost.
  • Think about business growth. If you intend to employ more people, your IT costs are likely to increase. You may also need to invest in additional storage as the volume of data held by your business grows.
  • Research support costs. In some circumstances, keeping IT support in-house is better for your budget. However, smaller companies generally find an external support contract is more cost-effective.
  • Allocate sufficient funds for IT security. These should cover security software, backups and contingency funds for disaster recovery.
  • Invest in IT training - it can pay for itself many times over in terms of increased productivity. In-house training is a cheap option, but offsite courses can cost as little as £500 for small groups.
  • Keep IT part of your business plan. Your IT systems should keep working even when you don't. A top line monthly update allows you to spot potential problems and tweak budgets if necessary.
  • Review your IT budget in detail annually when you carry out your key business planning.

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