By the end of 2021, businesses are expected to have spent an incredible $3.9 trillion on IT services and technology. Knowing how you plan to spend your department’s IT services budget can help you plan for next year and simplify many of the steps involved in running an IT department.
While sitting down to create a thorough IT budget might sound burdensome, taking the time to do this right can save you time and money in the long run. We will walk you through what makes this process so important and the best practices to keep in mind as you start to create your own budget.
Why an IT Services Budget Is Important
Creating an IT budget forces you to plan ahead and helps you avoid overspending. With proper planning, you give yourself time to research your IT options. Managing regular maintenance instead of waiting for breakdowns will help you minimize your costs. Since you have a predetermined budget, you have to prioritize your spending, which can help you avoid additional, unnecessary expenses.
Once you get accustomed to making and following an IT budget, you will discover several more benefits.
The benefits of an IT budget
- You’ll have a clear idea about your values and focus for the coming year.
- It will be easier to justify your expenses. You will have the documentation prepared as a part of your budgeting process!
- You won’t have to prepare special justifications for expenses throughout the year. Your budget would have been approved at the beginning!
- You will have planned for, and have room to manage, opportunities or emergencies that might come up throughout the year.
IT Services Budgeting Best Practices
There are a few best practices that can help you create an effective and accurate IT budget and help you plan ahead for your IT services for the next year. Here are a few ideas to keep in mind:
1. Know your minimum and maximum thresholds for each category of expenses and set them at realistic rates. Make an honest assessment of the funds you will need so that you can stick to your budget throughout the year.
2. Research your options and consider the strengths and weaknesses of different IT services providers, technology, and licenses. Since you are planning ahead, you have the chance to carefully evaluate the different options. This way, you can make the selection that works best for your brand, rather than scrambling to make a decision quickly because you are running out of time.
3. As you evaluate your options, make sure your budget reflects the actual numbers from vendors. It should also take into account the numbers you needed to run your department last year. You do not want to set a budget based on your guesses, but rather on solid data.
4. Know how your organization is likely to grow and develop in the next year. As you outline your budget, you want to take into account how your business will likely change. Your IT budget will need to reflect these new opportunities and leave you room to manage new needs that might arise.
5. Work with an IT partner who can help you evaluate your IT needs and priorities and create a solid budget. An IT services provider will help you develop an accurate budget so you have an excellent idea of the likely costs you will incur.
Things to consider when creating your IT budget
As you begin to develop your IT budget, you will find that there are some important pieces of information you will want to consider. First, you want to start the process by looking at your actual budget from the previous year. Look at how well you were able to stick to the budget and how it reflected your department’s needs. Note the areas where you know you will need more for the coming year. This can provide you with an excellent starting point for your new budget. You will be able to articulate how much more you would need for the upcoming year vs. years past and where, precisely, the money has gone in the past.
You also want to make sure your budget accurately reflects all of the different areas of IT spending. For example, besides counting employee salaries and budget for independent contractors, don’t forget to budget for employee bonuses or benefits. Make sure your budget reflects:
- Department employee salaries, bonuses, benefits, and other personnel costs
- Hardware costs, including upgrades and maintenance
- Software costs, including licenses, updates, and operating costs
- Cybersecurity costs (Cybersecurity has become an increasingly important part of running an organization, and neglecting this area, including the cost of backing up files, can be disastrous.)
- Costs for specific projects that the department will undertake in the coming year like replacing outdated hardware or other IT infrastructure components.
As you build your budget, you also want to pay attention to what your competitors spend. Look at the technology they use, the vendors they work with, and the likely budget they require to run their departments. This can help you set appropriate numbers for your budget.
Why Let Nutmeg Consulting Help You Budget for IT Services
IT issues that derail your organization and difficulties securing the budget you need to do your job well can make running a successful operation challenging. An IT budget that has been established properly can make the entire process simpler. Secure the funds you will need and experience how much easier it is to run your organization.
As your IT services provider, we do more than fix broken devices, we are there to provide you with the guidance and support you need to thrive. That includes helping you throughout the IT budgeting process.