The annual budgeting process can be a time consuming, frustrating, and thankless task that very often gets pushed aside for more urgent responsibilities. Let’s face it – budgeting can be difficult – especially if you want to prepare an itemized budget rather than just pull together numbers based on last-year’s spending patterns. Preparing a realistic Information Technology (IT) budget presents an even greater challenge because of the pace with which technology changes occur. To provide some help, we present a set of practical steps designed to help make the process a little less stressful, and make the final IT budget document a little more meaningful.
First off, IT budgeting is a process, it is not an event. It is an important management function and part of the normal business planning process. It also helps an organization focus on its goals and objectives and how IT plays a role in meeting those objectives.
How you view information technology will determine how much time and effort you should spend on the development of your IT budget, and how often it should be reviewed and updated. For example, if you view IT as an expense item and your goal is to spend as little as possible on it, then you don’t need to expend much brain power to come up with a number. On the other hand, if you view IT as a strategic asset that will help give you a competitive advantage, increase your efficiency, and provide your customers with better service, then you need to put in some quality time developing your plan, and allocate time to review and adjust that plan on a quarterly basis. Let’s get started!
- Know your current situation. Determine what you spent this year and the year before on IT. Your financial statements should provide details of your spending, provided that it was categorized properly when the data was entered. This information will be used for comparative purposes, not necessarily to set next year’s budget. We also recommend having a detailed, up-to-date worksheet of your current hardware AND software inventory. Having a solid grasp on your inventory will allow you to plan for what may need to be replaced next year, and in the years to come. If you don’t have a list, we recommend the free network management software tool from SPICEWORKS. This tool will investigate your network and provide all the details you need to make wise decisions.
- Establish easily understood spending categories. A budget plan based on clear classifications will be easier to understand than a long wish list of disjointed items. We recommend classifying your IT investment into the following ten categories:
- Hardware purchases and/or leases
- Hardware repairs and maintenance
- Software licenses and maintenance
- Professional fees and support subscriptions
- Application and Website hosting
- Telecommunication and Internet related service fees
- Ongoing education and training for your staff
- Disaster recovery and business continuity expenses
Still feeling a little unsure of where to start? It never hurts to seek advice from a professional. Remember, IT budgeting is a process; it is not an event. It takes time, effort and a little expertise to do it right. If the whole process sounds like a daunting task that you would rather delegate, or if you need help with step 6, then seek out a qualified IT consultant who can assist you in developing a meaningful technology plan. A great place to start is by contacting Providence today!
Jeff Dettloff is the President and Chief Problem Solver for Providence Consulting, Lansing’s leading provider of advanced computer services and innovative technology solutions.