No one can deny the importance of financial planning when it comes to running your personal life, and the same principle goes for planning your IT budget when operating a company. Just like in your personal life, you must be willing to analyze and understand your business’s long and short-term goals to be able to budget for them accordingly.
But how exactly to you foresee your long-term IT goals, when they seem to change at virtually every turn? To make the task more manageable, here is what you need to know about forming your IT strategy and planning an IT budget to help you drive it towards success.
What Is An IT Budget?
Just like any other type of budgeting, putting together an IT budget is the act of putting aside money for your future IT initiatives, including hardware, staffing, maintenance, reoccurring miscellaneous expenses, or specific projects that your company is undertaking. In simple terms, your IT budget is the money you can allocate towards your IT expenses, whether that’s a yearly lump sum, or on per-need basis.
Why Do I Need An IT Budget?
Having a well thought out budget is essential to keeping your IT department and initiatives running smoothly. For one, it provides the money you need to carry out any of the necessary tasks, or purchases, but it also serves as a kind of blueprint for recognizing the IT tasks that are vital to your business. Without an existing budget, you may overlook a crucial IT undertaking, or simply run out of money necessary to implement it, giving you the problem of a costly downtime, a security breach, or missed business goals and opportunities.
” As the role of technology shifts, budgets and the investment process are subject to increased scrutinization—and are ripe for evolution. ”
Who Is Involved In Preparing An IT Budget?
Depending on the size of your organization, an IT budget may be produced by just a few, or many IT professionals that are involved with your organization. Generally speaking, an IT budget is created by the company’s top IT employees. Yet, the finished budget affects everyone who takes part in executing your IT initiatives, so you may need to involve other professionals such as managers, contractors, or consultants.
What Should Be Included In An IT Budget?
A well prepared IT budget isn’t there to revolutionize your work process, it will merely re-affirm the priorities that already exist and are understood by your team. If you’re experiencing pushback on any part of your budget, you should work to clear up any misconceptions or adjust your budget to fit your business needs. Here are the components of a thorough IT budget.
- Ongoing Maintenance & Support: Technology is ever changing, so your IT budget must account for any ongoing maintenance or support you will require in the duration of the year. Without consistent maintenance, your network and infrastructure will deteriorate along with your work environment.
- Hardware: This portion of your budget should include any ongoing support necessary for your existing computer hardware, or any additional hardware that you plan to purchase or install in the duration of the year.
- Software: Include any necessary expenses for routine software support and implementation, as well as the cost of any software you plan to purchase during the year.
- Cloud: Also included in the budget, should be any services or costs associated with your private or public cloud, including its implementation.
- Backup & Disaster Recovery: It is important to consider the costs of backing up your data and disaster recovery as you put together your budget. These costs should also include any outsourcing fees, or cost of storage through a datacenter.
- Relevant Projects: Any projects related to your IT department should also be included in the final budget. This may include replacing computers, switching to a cloud model, or any adjustments you are planning to make during the year. Generally speaking, it is recommended that you replace laptops and computers once every three years, and your server every five years. It’s also important to include your estimates for labor costs.
- Miscellaneous Expenses: It’s no secret that IT emergencies do happen, which is why it’s important to allocate some of your budget to any miscellaneous expenses that might arise throughout the year. If you’re wondering how much to set aside, it’s helpful to think of roughly a month of your company’s total IT costs.
A Well Planned IT Budget Is Vital To Achieving Your Goals
A well thought out and defined IT budget works hand-in-hand with your business strategy to achieve both your long-term and short-term goals. A working budget also helps you get the most out of your IT investment, while allowing you to make informed decisions about your spending. Far from rigid, an IT budget gives you the ability to make changes to your strategy in case of unforeseen changes without causing problems to your business, so you can still achieve your mission. Having this important plan in place gives your company the edge it needs to stand apart form the competition, while giving you the power to better execute on your goals.