7 Tips for Effective Budgeting for IT Services
Businesses are constantly striving to implement new technologies, better processes, and improve automation to maximize their growth and revenue opportunities. This typically leads to a considerable rise in their IT expenses. In fact, 68% of companies have reported an increase in their IT budgets for 2019/2020.
Budgeting for IT services is imperative for allocating and securing funds from a business’s overall budget to fund IT expenses. It requires an understanding of aligning the budget with the larger organizational goals. A reliable IT company can be helpful in this regard.
Key Factors to Consider When Budgeting for IT Services
Here are a few considerations to bear in mind when preparing an effective IT budget.
1. Audit the Existing IT Infrastructure
Organizations should start their budgeting for the IT services process with an effective audit of their current IT infrastructure. This includes software, hardware, printers, servers, phone systems, and network infrastructure. Auditing will give them a clear idea of their current IT assets, thereby providing a solid base for budgeting for IT services.
Businesses should look into the following aspects when auditing their IT infrastructure:
- What kind of architecture are they presently using?
- Which applications have they installed?
- Which software and hardware are performing well and which ones need to be updated?
- What are their various cybersecurity concerns?
- How can these security concerns be ranked in terms of their immediate level of threat?
- What are the present goals and objectives of the business?
- What changes does the business need to make to achieve its goal faster?
2. Compare Past IT Budgets
Businesses typically start budgeting for IT services on the basis of upcoming IT expenditures. However, organizations should also refer to and compare their current IT budget with their past IT budgets. It will help businesses get a clear insight into how their IT expenditure has transformed over the years. Such comparisons also make it easier for companies to estimate how their IT spending will shape in the future.
3. Incorporate Forecasting in IT Budgeting
Forecasting helps businesses make more educated and informed decisions regarding when budgeting for IT services. It also gives a strategic view of where the business will go in the future.
Forecasting helps businesses predict key, high-level revenue streams, and other major categories of IT expenses.
To extract the most from forecasts, businesses can carry out the following steps:
- Businesses should compare their actual results with the forecast on a regular basis. The continuous analysis will help organizations adjust their forecast based on past results.
- Organizations should also forecast to discern different strategic outcomes. For instance, what will their business look like if they can grow their IT expenditure by 25 percent? What happens if companies cut their IT expenses by 15 percent?
- Every business should include its core team in the forecasting procedure. It will help make sure that every employee is on the same page and thoroughly understands the organizational objectives.
4. Align the IT Budget with the Company’s Strategic Goals
Budgeting for IT services should support the organization’s goals and objectives. Organizations should make sure to invest in the right technology rather than blindly embrace the latest technology trends. IT systems can either help or hamper a business’s strategic goal fulfillment. For instance, investing in a robust web ordering system can help businesses realize their goal of customer retention easily.
The IT budget should always show why investment is imperative for the organization. Budgeting for IT services should also depict how the IT budget can help businesses meet their short and long-term goals while improving their technical capacity.
In other words, a business’s IT goal should align with its other organizational goals. Here’s another instance: a business’s marketing team may need to integrate a new email marketing system or the sales team might want to test a new e-commerce feature on their website. A business’s IT budget needs to take these goals into account and support them.
5. Count Every Cost
When budgeting for IT services, the business should include all technology-related expenses. It should also incorporate yearly and monthly recurring expenses.
In short, the IT budget should provide a cost breakup of the below-mentioned services and systems:
- Hardware and software installation and upgrades
- Cloud services
- Software licenses and subscriptions
- Disaster recovery
- IT Infrastructure maintenance
- IT employees’ salary
Further, businesses can leverage managed IT services to enhance their company’s IT security and maintain regulatory compliance. They can take the help of a local IT company that can assist them with writing their Written Information Security Program (WISP), which is a legal requirement in the state of Massachusetts. Moreover, Massachusetts has stringent data security laws. Springfield-based businesses can, therefore, consider hiring IT services in Massachusetts to maintain adherence to state-specific regulatory laws.
6. Prepare for the Future
Proper budgeting for IT services enables businesses to be prepared to meet unexpected IT expenditures. The digital world changes quickly. Setting a fixed amount in the IT budget can be counterproductive for the business. Therefore, organizations should include additional contingency funds for unanticipated IT expenses such as those arising from power outages and system failures.
7. Review the Budget
Reviewing the budget gives the business a precise idea of where it hashave underspent and overspent over the years. This, in turn, helps them budget better for the next time. It also helps businesses get an overview of which strategies and tools work for them and which ones require changes.
A well-planned IT budget helps businesses seamlessly meet their financial goals as well as prepare for the future. The budget should, however, be aligned with the organization’s strategic plan.
Budgeting for IT services also keeps a business’s overall technology spending in check and helps reduce unnecessary expenditures. In a nutshell, with a planned IT budget, organizations can anticipate and track their IT expenditure, while ensuring alignment with their business goals. All in all, an adequate IT budget can improve a business’s entire workflow.
Contact us to get accurate IT consulting for your IT budget from our experts.
Marco is the owner and founder of NetLogix, Inc. a Managed IT Security Services firm that has been helping small businesses by providing an innovative and unique blend of managed IT services throughout New England with expertise in Insurance, Legal, Medical & Professional Services. Learn more about Marco and NetLogix here.