Creating and sticking to a budget has many benefits; it'll keep your spending on track, ensure you are allocating enough resources to projects, and help you plan and prepare for significant expenses that could otherwise negatively impact you and your business.
IT has the potential to be the most considerable expenditure for any business, so having a watertight IT budget can help control costs, and you keep your profit margins safe.
To help you create the ideal IT budget, we've put together our top 5 steps to creating a killer IT budget.
- Audit your past and present IT budgets
- Compare your IT spend to your competition
- Take inventory of your existing IT equipment
- Communicate with other teams/departments
- Explore future needs
Audit your past and present IT budgets
Review your past and present budgets and use them as a guide to create your next IT budget base. You can break this section up into three parts.
1. Make a note of your recurring costs.
Knowing your recurring costs and setting aside a lump sum of money for them will ensure you always have budgeted enough money to cover expenses you know will definitely occur.
2. Review unexpected costs
Are there trends in your unexpected costs? Are you regularly caught out by equipment breaking or new starters joining the business?
If your unexpected costs follow a trend, we recommend investigating these situations and working with the relevant people to best prepare for the cases to arise again. This may include auditing your hardware and noting when equipment will need upgrading or speaking to heads of departments and HR to find out if anyone plans on hiring in new staff over the next 12-month period (we recommend budgeting for at least 12-months at a time).
3. Record where you spent money
Knowing where your last budget went is essential to ensure you are not allocating too much or too little spend on projects. This will also help you keep track of new equipment/hardware/software to ensure you do not rebuy items you already have.
Compare your IT spend to your competition.
To ensure you remain competitive, you should compare your IT spending to your competition. You should research what other businesses in your industry are spending and other companies of a similar size.
If your business goals are to grow, we also recommend looking into the expenditures of businesses similar to your organisation's goal size.
Take inventory of your existing IT equipment.
Audit all current hardware and software to ensure you know what exactly you have. Use this time also to note when equipment and software need upgrading. Licences and software will need upgrading regularly, and the supplier usually determines this, so check your contracts to ensure you know when the renewals are due.
Upgrading hardware is usually done at your discretion. This will depend on what the item is used for, who by, and its purpose. Using outdated hardware can reduce productivity and can also cause security vulnerabilities.
Knowing when things need to be updated and upgraded means you can start the process before it's due, which will help you spread out the cost.
Communicate with other teams/departments
Talking to the IT team and other departments can help you gain a better insight into where, how, when, and why technology around the business is used, which can help you prioritise, streamline and reduce potential waste of technology around the company.
You could be currently paying for several licences that are not being used by a particular team. This means you can either reallocate or stop paying for wasted licences.
This is also a great time to find out from managers and employees what they'd wish to see in the budget, including new technology or upgraded equipment. Take notes of any trends as this could be an insight into commonly occurring issues or suggestions.
Explore future needs
Your budget should include a section for plans/needs. This should consider upcoming projects, training, potential new hires, office moves, and anything that has been discovered in the previous four steps.
Thoroughly researching future needs will help you anticipate and make educated predictions of expenses over the next 12-months.