IT Budgeting: Tips, Tricks, and Templates<\/h1><\/div>![\"A](\"https:\/\/iesmartsystems.com\/wp-content\/uploads\/2022\/02\/it-budget.jpg\" "\\"it-budget\\"")
<\/span><\/div><\/div>If you\u2019re struggling to build your IT budget or even the budgeting process, then we can help. Most businesses recognize the need for IT as a part of the larger operation, especially when it\u2019s time to troubleshoot the boss\u2019s laptop. Some IT departments may struggle to rise above the perception that IT exists only to fix problems and stay out of the way. Believe it or not, your IT budget is an excellent opportunity to illustrate the value your team brings to the organization as a whole.<\/p>\n
Turning in a cohesive annual budget is a requirement of any IT department worth their ethernet cables, but the budgeting process and final result should tell the story of how IT can help power the business.<\/p>\n<\/div>
IT Budgeting Planning Process<\/h2><\/div>A good place to start is with last year\u2019s budget. But don\u2019t fall into the trap of updating a few numbers and shipping the spreadsheet off to accounting. You will need the historical numbers to forecast the baseline of future costs. And you\u2019ll need a systematic process to gather all the information that comprises a thoughtful, compelling budget that your CFO and CEO will appreciate.<\/p>\n
Here\u2019s what your budget should achieve in broad terms:<\/p>\n
\n- Position the IT team as a partner that understands the future needs of the business.<\/li>\n
- Illustrate the connection between the money you\u2019re asking for and the value you\u2019ll deliver.<\/li>\n
- Focus on clarity and credible reasoning behind each item.<\/li>\n
- Guide the organization towards the best value by showing how different scenarios affect the budget.<\/li>\n
- Strike a balance between an overview of the numbers and a granular view of how those numbers break down to individual projects. If you keep it too general, your stakeholders may struggle to buy-in. If you go too far into the weeds, they won\u2019t understand it and may reject it without full consideration.<\/li>\n<\/ol>\n<\/div>
Look At The Past<\/h3><\/div>Examing last year\u2019s budget is the right place to start. It should provide you with a clear picture of the organization\u2019s needs up to the current moment. Whether you\u2019re using Excel or another budgeting software, you need a system for flagging items based on their status.<\/p>\n
For example:<\/p>\n
\n- Red could indicate costs that will NOT carry over into the near year, such as projects that finished or subscriptions that you will cancel or allow to lapse.<\/li>\n
- Green could indicate costs that WILL carry into the new year, such as staff, ongoing projects, current subscriptions, and maintenance.<\/li>\n
- Yellow could indicate items that you would consider eliminating or want to find new solutions to replace.<\/li>\n
- Blue could indicate new items, such as projects that haven\u2019t been approved, additional headcount, or expansions in the department\u2019s scope.<\/li>\n<\/ul>\n
A system like this will allow you to quickly evaluate your budget at a glance and to drill down on items that need more consideration. Does your budget have a lot of blue items? Those items will likely require extra explanation, whereas green items are likely to get a rubber stamp of approval.<\/p>\n<\/div>
Take Stock Of The Present<\/h3><\/div>Analyze how your IT department is functioning currently. Do you have a lot of technical debt built up? Then you need to build extra time and budget for addressing technical debt. Do you have abnormal frequent equipment repairs? Your hardware may be due for replacement. Do you have staff who have performed extra well or achieved new skills and need a raise or promotion? Build that into your budget so that it doesn\u2019t eat into other projects and so you don\u2019t risk losing talent due to poor compensation. en items are likely to get a rubber stamp of approval.<\/p>\n<\/div>
Visualize The Future<\/h3><\/div>Think about the technology investments and the hardware that could provide additional value to the business. Even something as banal as replacing old equipment can deliver fresh value \u2014 the less time you spend fixing old things, the more time you\u2019ll have for other more important work.<\/p>\n
Start by asking yourself \u201cWhat is the ideal scenario for the IT department?\u201d Don\u2019t disqualify items just because they\u2019re expensive. You can always cut something after you\u2019ve established clear priorities for the coming year.<\/p>\n
Laying out your priorities begins with last year\u2019s budget. Odds are, most of the things you did last year you will need to continue doing into the following year. So that category becomes \u201cInitiatives we will continue to support\u201d. Next, you ask \u201cIs there anything we did last year that we should STOP doing?\u201d and \u201cIs there anything we should START doing next year?\u201d The business may be spinning up new strategic initiatives and shuttering old ones.<\/p>\n
A high-functioning IT department should be a combination of supporting the existing business and preparing for future needs. You can\u2019t anticipate everything, and you can\u2019t spend 100% of your time working on non-essential projects.<\/p>\n
Your ideal budget should reflect a thoughtful division between essentials, maintenance, paying down technical debt, and new projects.<\/p>\n<\/div>
Who should be involved in IT budgeting?<\/h2><\/div>The answer to this question depends heavily on the sophistication and size of your IT department. If you begin the budgeting process early enough you can solicit the entire department for feedback about where the needs are. Sometimes frontline employees are well-positioned to know what\u2019s working and what isn\u2019t. You can set expectations that you won\u2019t grant every request for money, but it\u2019s a starting point to uncover hidden needs and get a realistic picture of the department.<\/p>\n
The person who is the most responsible is the Chief Technology Officer or whoever sits at the top of the IT department organizational chart.<\/p>\n
At the very least you want to include people managers and project managers who can give you a clear picture of the resources they need to fulfill their responsibilities. Give everyone suggested categories they can use to identify where each request fits in the overall budget.<\/p>\n
You should also solicit feedback from the company as a whole, by communicating with the other department heads. Do they have technology or equipment needs that you aren\u2019t aware of? Perhaps there are opportunities to cut unused services or software and free up money for more valuable projects.<\/p>\n
Again, just because you\u2019re asking for feedback doesn\u2019t mean that it\u2019s Christmas time and you\u2019re Santa Claus. But if you\u2019re serious about delivering more value to the organization as a whole, you need to know what the perceived needs are.<\/p>\n
We\u2019ve included some sample budget categories and a sample budget outline to get you started.<\/p>\n<\/div>
Tips For Information Technology Budgeting<\/h2><\/div>Here are some times to help you build a realistic, robust IT budget:<\/p>\n
\n- Think about your budget as a numerical representation of the value you deliver to the business as a whole \u2014 be prepared to tell that story compellingly.<\/li>\n
- Create a budget layout that is simple and clear at a high level as well as allowing stakeholders to analyze it at a granular level too.<\/li>\n
- The majority of your budget should be easy to approve because it represents ways that you\u2019re already supporting the business. Spend extra time detailing the new items that your business isn\u2019t accustomed to paying for.<\/li>\n
- Use a simple color flagging system to help stakeholders who aren\u2019t IT experts to understand how the different categories fit into the bigger picture.<\/li>\n<\/ol>\n<\/div>
Common IT Budget Categories<\/h2><\/div>Here are some high-level categories that every IT budget should include.<\/p>\n<\/div>
Staffing<\/h3><\/div>This one is pretty obvious. IT may use computers and automation, but you always need intelligent, hard-working people to run the software, fix the hardware, and help the organization to run smoothly. You may have full-time, part-time, salary, hourly, and contract employees. You will likely have some staff turnover and compensation adjustments to make in the coming year. Your HR department should be able to provide more details about historical staffing needs so you can prepare for the coming year.<\/p>\n<\/div>
Hardware<\/h3><\/div>There\u2019s a difference between new hardware and replacing existing hardware that is broken beyond repair or over its anticipated lifespan. If you\u2019re working with an asset management<\/a> system, you should be able to get a detailed report on what your hardware needs were in previous years and build on that base. Look out for unusually big-ticket items, such as server replacement. Your organization may be able to easily replace laptops regularly, but servers are another matter altogether. The sooner you know a server is ready for retirement, the sooner you can build support for the extra budget it takes to replace one.<\/p>\n<\/div>Software<\/h3><\/div>Monthly software licenses, annual licenses, fluctuating \u201cseat\u201d counts, and new software vendors all need to be part of this calculation. This is also an area where organizations tend to experience waste. What happens if you have an employee on a key project who requested a task-specific software platform for temporary use? What happens if that employee leaves or forgets about the annual license? You\u2019ll probably get hit with a bill when you least expect it. This is why you should use a vendor management system to see who you\u2019re paying and when the bill is due.<\/p>\n<\/div>
Maintenance<\/h3><\/div>We talked about technical debt earlier. That\u2019s when you have work that needs to be done, but you find a way to delay it. This can happen with hardware and software, it can even happen with asset management (where you fill storage rooms with unused gear). Some technical debt is inevitable, but if you budget time and resources properly for maintenance, you can keep it from building to unmanageable levels.<\/p>\n<\/div>
Outsourced Services<\/h3><\/div>Thanks to cloud computing and a globally connected economy, the odds are high that you contract with vendors to provide essential services. Take stock of these vendors and examine the value they bring. Maybe you can cut some costs, or maybe you stretch your dollar further by utilizing managed service providers<\/a>. Only you can make that decision.<\/p>\n<\/div>Sample IT budget<\/h2><\/div>The outline below illustrates some high-level line categories and some line items that a comprehensive IT budget should include. If you have last year\u2019s budget in hand, you already have a structure to work from. If you\u2019re building from scratch, this outline will give you a jump start.<\/p>\n<\/div>
\n- Ongoing expenses<\/span>\n
\n- Headcount<\/span>\n
\n- Talent acquisition<\/span><\/li>\n
- Raises, promotions, and continuing education<\/span><\/li>\n
- Existing staff<\/span>\n
\n- Internal staff<\/span><\/li>\n
- External\/contract staff<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n
- Hardware<\/span>\n
\n- Servers<\/span><\/li>\n
- Client computing resources (laptops, tablets, etc.)<\/span><\/li>\n
- Network infrastructure<\/span><\/li>\n
- Support contracts<\/span><\/li>\n<\/ol>\n<\/li>\n
- Software<\/span>\n
\n- Licenses<\/span><\/li>\n
- Subscriptions<\/span><\/li>\n
- Support\/maintenance contracts<\/span><\/li>\n<\/ol>\n<\/li>\n
- Maintenance<\/span><\/li>\n
- Outsourced services<\/span><\/li>\n<\/ol>\n<\/li>\n
- Project expenses (add as many as you need)<\/span>\n
\n- Project 1<\/span>\n
\n- Consulting expenses<\/span><\/li>\n
- General and administrative<\/span><\/li>\n
- Hardware<\/span><\/li>\n
- Software<\/span><\/li>\n<\/ol>\n<\/li>\n
- Project 2<\/span>\n
\n- Consulting expenses<\/span><\/li>\n
- General and administrative<\/span><\/li>\n
- Hardware<\/span><\/li>\n
- Software<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/div><\/div><\/div><\/div><\/div>
About i.e.Smart Systems<\/h4><\/div>i.e.Smart Systems is a Houston, TX based technology integration partner that specializes in design and installation of audio\/visual technology and structured cabling. For more than three decades, our team of in-house experts has partnered with business owners, architectural firms, general contractors, construction managers, real estate developers, and designers in the Houston market, to deliver reliable, scalable solutions that align with their unique goals.<\/p>\n<\/div><\/div><\/div>
<\/span><\/div>If you\u2019re struggling to build your IT budget or even the budgeting process, then we can help. Most businesses recognize the need for IT as a part of the larger operation, especially when it\u2019s time to troubleshoot the boss\u2019s laptop. Some IT departments may struggle to rise above the perception that IT exists only to fix problems and stay out of the way. Believe it or not, your IT budget is an excellent opportunity to illustrate the value your team brings to the organization as a whole.<\/p>\n
Turning in a cohesive annual budget is a requirement of any IT department worth their ethernet cables, but the budgeting process and final result should tell the story of how IT can help power the business.<\/p>\n<\/div>
IT Budgeting Planning Process<\/h2><\/div>A good place to start is with last year\u2019s budget. But don\u2019t fall into the trap of updating a few numbers and shipping the spreadsheet off to accounting. You will need the historical numbers to forecast the baseline of future costs. And you\u2019ll need a systematic process to gather all the information that comprises a thoughtful, compelling budget that your CFO and CEO will appreciate.<\/p>\n
Here\u2019s what your budget should achieve in broad terms:<\/p>\n
\n- Position the IT team as a partner that understands the future needs of the business.<\/li>\n
- Illustrate the connection between the money you\u2019re asking for and the value you\u2019ll deliver.<\/li>\n
- Focus on clarity and credible reasoning behind each item.<\/li>\n
- Guide the organization towards the best value by showing how different scenarios affect the budget.<\/li>\n
- Strike a balance between an overview of the numbers and a granular view of how those numbers break down to individual projects. If you keep it too general, your stakeholders may struggle to buy-in. If you go too far into the weeds, they won\u2019t understand it and may reject it without full consideration.<\/li>\n<\/ol>\n<\/div>
Look At The Past<\/h3><\/div>Examing last year\u2019s budget is the right place to start. It should provide you with a clear picture of the organization\u2019s needs up to the current moment. Whether you\u2019re using Excel or another budgeting software, you need a system for flagging items based on their status.<\/p>\n
For example:<\/p>\n
\n- Red could indicate costs that will NOT carry over into the near year, such as projects that finished or subscriptions that you will cancel or allow to lapse.<\/li>\n
- Green could indicate costs that WILL carry into the new year, such as staff, ongoing projects, current subscriptions, and maintenance.<\/li>\n
- Yellow could indicate items that you would consider eliminating or want to find new solutions to replace.<\/li>\n
- Blue could indicate new items, such as projects that haven\u2019t been approved, additional headcount, or expansions in the department\u2019s scope.<\/li>\n<\/ul>\n
A system like this will allow you to quickly evaluate your budget at a glance and to drill down on items that need more consideration. Does your budget have a lot of blue items? Those items will likely require extra explanation, whereas green items are likely to get a rubber stamp of approval.<\/p>\n<\/div>
Take Stock Of The Present<\/h3><\/div>Analyze how your IT department is functioning currently. Do you have a lot of technical debt built up? Then you need to build extra time and budget for addressing technical debt. Do you have abnormal frequent equipment repairs? Your hardware may be due for replacement. Do you have staff who have performed extra well or achieved new skills and need a raise or promotion? Build that into your budget so that it doesn\u2019t eat into other projects and so you don\u2019t risk losing talent due to poor compensation. en items are likely to get a rubber stamp of approval.<\/p>\n<\/div>
Visualize The Future<\/h3><\/div>Think about the technology investments and the hardware that could provide additional value to the business. Even something as banal as replacing old equipment can deliver fresh value \u2014 the less time you spend fixing old things, the more time you\u2019ll have for other more important work.<\/p>\n
Start by asking yourself \u201cWhat is the ideal scenario for the IT department?\u201d Don\u2019t disqualify items just because they\u2019re expensive. You can always cut something after you\u2019ve established clear priorities for the coming year.<\/p>\n
Laying out your priorities begins with last year\u2019s budget. Odds are, most of the things you did last year you will need to continue doing into the following year. So that category becomes \u201cInitiatives we will continue to support\u201d. Next, you ask \u201cIs there anything we did last year that we should STOP doing?\u201d and \u201cIs there anything we should START doing next year?\u201d The business may be spinning up new strategic initiatives and shuttering old ones.<\/p>\n
A high-functioning IT department should be a combination of supporting the existing business and preparing for future needs. You can\u2019t anticipate everything, and you can\u2019t spend 100% of your time working on non-essential projects.<\/p>\n
Your ideal budget should reflect a thoughtful division between essentials, maintenance, paying down technical debt, and new projects.<\/p>\n<\/div>
Who should be involved in IT budgeting?<\/h2><\/div>The answer to this question depends heavily on the sophistication and size of your IT department. If you begin the budgeting process early enough you can solicit the entire department for feedback about where the needs are. Sometimes frontline employees are well-positioned to know what\u2019s working and what isn\u2019t. You can set expectations that you won\u2019t grant every request for money, but it\u2019s a starting point to uncover hidden needs and get a realistic picture of the department.<\/p>\n
The person who is the most responsible is the Chief Technology Officer or whoever sits at the top of the IT department organizational chart.<\/p>\n
At the very least you want to include people managers and project managers who can give you a clear picture of the resources they need to fulfill their responsibilities. Give everyone suggested categories they can use to identify where each request fits in the overall budget.<\/p>\n
You should also solicit feedback from the company as a whole, by communicating with the other department heads. Do they have technology or equipment needs that you aren\u2019t aware of? Perhaps there are opportunities to cut unused services or software and free up money for more valuable projects.<\/p>\n
Again, just because you\u2019re asking for feedback doesn\u2019t mean that it\u2019s Christmas time and you\u2019re Santa Claus. But if you\u2019re serious about delivering more value to the organization as a whole, you need to know what the perceived needs are.<\/p>\n
We\u2019ve included some sample budget categories and a sample budget outline to get you started.<\/p>\n<\/div>
Tips For Information Technology Budgeting<\/h2><\/div>Here are some times to help you build a realistic, robust IT budget:<\/p>\n
\n- Think about your budget as a numerical representation of the value you deliver to the business as a whole \u2014 be prepared to tell that story compellingly.<\/li>\n
- Create a budget layout that is simple and clear at a high level as well as allowing stakeholders to analyze it at a granular level too.<\/li>\n
- The majority of your budget should be easy to approve because it represents ways that you\u2019re already supporting the business. Spend extra time detailing the new items that your business isn\u2019t accustomed to paying for.<\/li>\n
- Use a simple color flagging system to help stakeholders who aren\u2019t IT experts to understand how the different categories fit into the bigger picture.<\/li>\n<\/ol>\n<\/div>
Common IT Budget Categories<\/h2><\/div>Here are some high-level categories that every IT budget should include.<\/p>\n<\/div>
Staffing<\/h3><\/div>This one is pretty obvious. IT may use computers and automation, but you always need intelligent, hard-working people to run the software, fix the hardware, and help the organization to run smoothly. You may have full-time, part-time, salary, hourly, and contract employees. You will likely have some staff turnover and compensation adjustments to make in the coming year. Your HR department should be able to provide more details about historical staffing needs so you can prepare for the coming year.<\/p>\n<\/div>
Hardware<\/h3><\/div>There\u2019s a difference between new hardware and replacing existing hardware that is broken beyond repair or over its anticipated lifespan. If you\u2019re working with an asset management<\/a> system, you should be able to get a detailed report on what your hardware needs were in previous years and build on that base. Look out for unusually big-ticket items, such as server replacement. Your organization may be able to easily replace laptops regularly, but servers are another matter altogether. The sooner you know a server is ready for retirement, the sooner you can build support for the extra budget it takes to replace one.<\/p>\n<\/div>Software<\/h3><\/div>Monthly software licenses, annual licenses, fluctuating \u201cseat\u201d counts, and new software vendors all need to be part of this calculation. This is also an area where organizations tend to experience waste. What happens if you have an employee on a key project who requested a task-specific software platform for temporary use? What happens if that employee leaves or forgets about the annual license? You\u2019ll probably get hit with a bill when you least expect it. This is why you should use a vendor management system to see who you\u2019re paying and when the bill is due.<\/p>\n<\/div>
Maintenance<\/h3><\/div>We talked about technical debt earlier. That\u2019s when you have work that needs to be done, but you find a way to delay it. This can happen with hardware and software, it can even happen with asset management (where you fill storage rooms with unused gear). Some technical debt is inevitable, but if you budget time and resources properly for maintenance, you can keep it from building to unmanageable levels.<\/p>\n<\/div>
Outsourced Services<\/h3><\/div>Thanks to cloud computing and a globally connected economy, the odds are high that you contract with vendors to provide essential services. Take stock of these vendors and examine the value they bring. Maybe you can cut some costs, or maybe you stretch your dollar further by utilizing managed service providers<\/a>. Only you can make that decision.<\/p>\n<\/div>Sample IT budget<\/h2><\/div>The outline below illustrates some high-level line categories and some line items that a comprehensive IT budget should include. If you have last year\u2019s budget in hand, you already have a structure to work from. If you\u2019re building from scratch, this outline will give you a jump start.<\/p>\n<\/div>
\n- Ongoing expenses<\/span>\n
\n- Headcount<\/span>\n
\n- Talent acquisition<\/span><\/li>\n
- Raises, promotions, and continuing education<\/span><\/li>\n
- Existing staff<\/span>\n
\n- Internal staff<\/span><\/li>\n
- External\/contract staff<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n
- Hardware<\/span>\n
\n- Servers<\/span><\/li>\n
- Client computing resources (laptops, tablets, etc.)<\/span><\/li>\n
- Network infrastructure<\/span><\/li>\n
- Support contracts<\/span><\/li>\n<\/ol>\n<\/li>\n
- Software<\/span>\n
\n- Licenses<\/span><\/li>\n
- Subscriptions<\/span><\/li>\n
- Support\/maintenance contracts<\/span><\/li>\n<\/ol>\n<\/li>\n
- Maintenance<\/span><\/li>\n
- Outsourced services<\/span><\/li>\n<\/ol>\n<\/li>\n
- Project expenses (add as many as you need)<\/span>\n
\n- Project 1<\/span>\n
\n- Consulting expenses<\/span><\/li>\n
- General and administrative<\/span><\/li>\n
- Hardware<\/span><\/li>\n
- Software<\/span><\/li>\n<\/ol>\n<\/li>\n
- Project 2<\/span>\n
\n- Consulting expenses<\/span><\/li>\n
- General and administrative<\/span><\/li>\n
- Hardware<\/span><\/li>\n
- Software<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/div><\/div><\/div><\/div><\/div>
About i.e.Smart Systems<\/h4><\/div>i.e.Smart Systems is a Houston, TX based technology integration partner that specializes in design and installation of audio\/visual technology and structured cabling. For more than three decades, our team of in-house experts has partnered with business owners, architectural firms, general contractors, construction managers, real estate developers, and designers in the Houston market, to deliver reliable, scalable solutions that align with their unique goals.<\/p>\n<\/div><\/div><\/div>
A good place to start is with last year\u2019s budget. But don\u2019t fall into the trap of updating a few numbers and shipping the spreadsheet off to accounting. You will need the historical numbers to forecast the baseline of future costs. And you\u2019ll need a systematic process to gather all the information that comprises a thoughtful, compelling budget that your CFO and CEO will appreciate.<\/p>\n
Here\u2019s what your budget should achieve in broad terms:<\/p>\n
- \n
- Position the IT team as a partner that understands the future needs of the business.<\/li>\n
- Illustrate the connection between the money you\u2019re asking for and the value you\u2019ll deliver.<\/li>\n
- Focus on clarity and credible reasoning behind each item.<\/li>\n
- Guide the organization towards the best value by showing how different scenarios affect the budget.<\/li>\n
- Strike a balance between an overview of the numbers and a granular view of how those numbers break down to individual projects. If you keep it too general, your stakeholders may struggle to buy-in. If you go too far into the weeds, they won\u2019t understand it and may reject it without full consideration.<\/li>\n<\/ol>\n<\/div>
Look At The Past<\/h3><\/div>
Examing last year\u2019s budget is the right place to start. It should provide you with a clear picture of the organization\u2019s needs up to the current moment. Whether you\u2019re using Excel or another budgeting software, you need a system for flagging items based on their status.<\/p>\n
For example:<\/p>\n
- \n
- Red could indicate costs that will NOT carry over into the near year, such as projects that finished or subscriptions that you will cancel or allow to lapse.<\/li>\n
- Green could indicate costs that WILL carry into the new year, such as staff, ongoing projects, current subscriptions, and maintenance.<\/li>\n
- Yellow could indicate items that you would consider eliminating or want to find new solutions to replace.<\/li>\n
- Blue could indicate new items, such as projects that haven\u2019t been approved, additional headcount, or expansions in the department\u2019s scope.<\/li>\n<\/ul>\n
A system like this will allow you to quickly evaluate your budget at a glance and to drill down on items that need more consideration. Does your budget have a lot of blue items? Those items will likely require extra explanation, whereas green items are likely to get a rubber stamp of approval.<\/p>\n<\/div>
Take Stock Of The Present<\/h3><\/div>
Analyze how your IT department is functioning currently. Do you have a lot of technical debt built up? Then you need to build extra time and budget for addressing technical debt. Do you have abnormal frequent equipment repairs? Your hardware may be due for replacement. Do you have staff who have performed extra well or achieved new skills and need a raise or promotion? Build that into your budget so that it doesn\u2019t eat into other projects and so you don\u2019t risk losing talent due to poor compensation. en items are likely to get a rubber stamp of approval.<\/p>\n<\/div>
Visualize The Future<\/h3><\/div>
Think about the technology investments and the hardware that could provide additional value to the business. Even something as banal as replacing old equipment can deliver fresh value \u2014 the less time you spend fixing old things, the more time you\u2019ll have for other more important work.<\/p>\n
Start by asking yourself \u201cWhat is the ideal scenario for the IT department?\u201d Don\u2019t disqualify items just because they\u2019re expensive. You can always cut something after you\u2019ve established clear priorities for the coming year.<\/p>\n
Laying out your priorities begins with last year\u2019s budget. Odds are, most of the things you did last year you will need to continue doing into the following year. So that category becomes \u201cInitiatives we will continue to support\u201d. Next, you ask \u201cIs there anything we did last year that we should STOP doing?\u201d and \u201cIs there anything we should START doing next year?\u201d The business may be spinning up new strategic initiatives and shuttering old ones.<\/p>\n
A high-functioning IT department should be a combination of supporting the existing business and preparing for future needs. You can\u2019t anticipate everything, and you can\u2019t spend 100% of your time working on non-essential projects.<\/p>\n
Your ideal budget should reflect a thoughtful division between essentials, maintenance, paying down technical debt, and new projects.<\/p>\n<\/div>
Who should be involved in IT budgeting?<\/h2><\/div>
The answer to this question depends heavily on the sophistication and size of your IT department. If you begin the budgeting process early enough you can solicit the entire department for feedback about where the needs are. Sometimes frontline employees are well-positioned to know what\u2019s working and what isn\u2019t. You can set expectations that you won\u2019t grant every request for money, but it\u2019s a starting point to uncover hidden needs and get a realistic picture of the department.<\/p>\n
The person who is the most responsible is the Chief Technology Officer or whoever sits at the top of the IT department organizational chart.<\/p>\n
At the very least you want to include people managers and project managers who can give you a clear picture of the resources they need to fulfill their responsibilities. Give everyone suggested categories they can use to identify where each request fits in the overall budget.<\/p>\n
You should also solicit feedback from the company as a whole, by communicating with the other department heads. Do they have technology or equipment needs that you aren\u2019t aware of? Perhaps there are opportunities to cut unused services or software and free up money for more valuable projects.<\/p>\n
Again, just because you\u2019re asking for feedback doesn\u2019t mean that it\u2019s Christmas time and you\u2019re Santa Claus. But if you\u2019re serious about delivering more value to the organization as a whole, you need to know what the perceived needs are.<\/p>\n
We\u2019ve included some sample budget categories and a sample budget outline to get you started.<\/p>\n<\/div>
Tips For Information Technology Budgeting<\/h2><\/div>
Here are some times to help you build a realistic, robust IT budget:<\/p>\n
- \n
- Think about your budget as a numerical representation of the value you deliver to the business as a whole \u2014 be prepared to tell that story compellingly.<\/li>\n
- Create a budget layout that is simple and clear at a high level as well as allowing stakeholders to analyze it at a granular level too.<\/li>\n
- The majority of your budget should be easy to approve because it represents ways that you\u2019re already supporting the business. Spend extra time detailing the new items that your business isn\u2019t accustomed to paying for.<\/li>\n
- Use a simple color flagging system to help stakeholders who aren\u2019t IT experts to understand how the different categories fit into the bigger picture.<\/li>\n<\/ol>\n<\/div>
Common IT Budget Categories<\/h2><\/div>
Here are some high-level categories that every IT budget should include.<\/p>\n<\/div>
Staffing<\/h3><\/div>
This one is pretty obvious. IT may use computers and automation, but you always need intelligent, hard-working people to run the software, fix the hardware, and help the organization to run smoothly. You may have full-time, part-time, salary, hourly, and contract employees. You will likely have some staff turnover and compensation adjustments to make in the coming year. Your HR department should be able to provide more details about historical staffing needs so you can prepare for the coming year.<\/p>\n<\/div>
Hardware<\/h3><\/div>
There\u2019s a difference between new hardware and replacing existing hardware that is broken beyond repair or over its anticipated lifespan. If you\u2019re working with an asset management<\/a> system, you should be able to get a detailed report on what your hardware needs were in previous years and build on that base. Look out for unusually big-ticket items, such as server replacement. Your organization may be able to easily replace laptops regularly, but servers are another matter altogether. The sooner you know a server is ready for retirement, the sooner you can build support for the extra budget it takes to replace one.<\/p>\n<\/div>
Software<\/h3><\/div>
Monthly software licenses, annual licenses, fluctuating \u201cseat\u201d counts, and new software vendors all need to be part of this calculation. This is also an area where organizations tend to experience waste. What happens if you have an employee on a key project who requested a task-specific software platform for temporary use? What happens if that employee leaves or forgets about the annual license? You\u2019ll probably get hit with a bill when you least expect it. This is why you should use a vendor management system to see who you\u2019re paying and when the bill is due.<\/p>\n<\/div>
Maintenance<\/h3><\/div>
We talked about technical debt earlier. That\u2019s when you have work that needs to be done, but you find a way to delay it. This can happen with hardware and software, it can even happen with asset management (where you fill storage rooms with unused gear). Some technical debt is inevitable, but if you budget time and resources properly for maintenance, you can keep it from building to unmanageable levels.<\/p>\n<\/div>
Outsourced Services<\/h3><\/div>
Thanks to cloud computing and a globally connected economy, the odds are high that you contract with vendors to provide essential services. Take stock of these vendors and examine the value they bring. Maybe you can cut some costs, or maybe you stretch your dollar further by utilizing managed service providers<\/a>. Only you can make that decision.<\/p>\n<\/div>
Sample IT budget<\/h2><\/div>
The outline below illustrates some high-level line categories and some line items that a comprehensive IT budget should include. If you have last year\u2019s budget in hand, you already have a structure to work from. If you\u2019re building from scratch, this outline will give you a jump start.<\/p>\n<\/div>
- \n
- Ongoing expenses<\/span>\n
- \n
- Headcount<\/span>\n
- \n
- Talent acquisition<\/span><\/li>\n
- Raises, promotions, and continuing education<\/span><\/li>\n
- Existing staff<\/span>\n
- \n
- Internal staff<\/span><\/li>\n
- External\/contract staff<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n
- Hardware<\/span>\n
- \n
- Servers<\/span><\/li>\n
- Client computing resources (laptops, tablets, etc.)<\/span><\/li>\n
- Network infrastructure<\/span><\/li>\n
- Support contracts<\/span><\/li>\n<\/ol>\n<\/li>\n
- Software<\/span>\n
- \n
- Licenses<\/span><\/li>\n
- Subscriptions<\/span><\/li>\n
- Support\/maintenance contracts<\/span><\/li>\n<\/ol>\n<\/li>\n
- Maintenance<\/span><\/li>\n
- Outsourced services<\/span><\/li>\n<\/ol>\n<\/li>\n
- Project expenses (add as many as you need)<\/span>\n
- \n
- Project 1<\/span>\n
- \n
- Consulting expenses<\/span><\/li>\n
- General and administrative<\/span><\/li>\n
- Hardware<\/span><\/li>\n
- Software<\/span><\/li>\n<\/ol>\n<\/li>\n
- Project 2<\/span>\n
- \n
- Consulting expenses<\/span><\/li>\n
- General and administrative<\/span><\/li>\n
- Hardware<\/span><\/li>\n
- Software<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/div><\/div><\/div><\/div><\/div>
About i.e.Smart Systems<\/h4><\/div>
i.e.Smart Systems is a Houston, TX based technology integration partner that specializes in design and installation of audio\/visual technology and structured cabling. For more than three decades, our team of in-house experts has partnered with business owners, architectural firms, general contractors, construction managers, real estate developers, and designers in the Houston market, to deliver reliable, scalable solutions that align with their unique goals.<\/p>\n<\/div><\/div><\/div>
- General and administrative<\/span><\/li>\n
- General and administrative<\/span><\/li>\n
- Consulting expenses<\/span><\/li>\n
- Subscriptions<\/span><\/li>\n
- Client computing resources (laptops, tablets, etc.)<\/span><\/li>\n
- External\/contract staff<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n
- Raises, promotions, and continuing education<\/span><\/li>\n
- Talent acquisition<\/span><\/li>\n
- Headcount<\/span>\n
- Ongoing expenses<\/span>\n
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