One of your most important jobs as an IT manager is managing your organisation’s IT budget. As your budgeting and planning here will affect everyone in your organisation, it’s essential that you put in the time and effort to make sure you get it right.
Before you get started
Managed effectively, your IT budget will make sure your people have the resources they need to do a stellar job and that you get the most out of your organisation’s hardware and software. However, a failure to budget well or at all could mean you risk big losses from things like cybersecurity breaches, not being able to set your prices competitively and difficulties in managing cash flow and tracking credit.
When you begin planning your IT spend, a good place to start is analysing the figures from your department over the last few years – this will help you spot areas that need improvement, cut any excessive costs and identify opportunities for increased profits. After you’ve done this, it’s time to start work on your IT budget. To help you with this, we’ve collected some of the key things you should consider below to get you started.
Key spending areas of your IT Budget
Support and maintenance
Support & maintenance represents one of the most important areas of your IT budget but it can be hard to decide just how much of your budget should go towards this. If you run into problems, the maintenance costs to fix this can vary hugely, as this problem could be just a minor glitch that can be fixed in minutes or a serious security breach that might last for days and cost your company a pretty penny.
To help decide how much to allocate to this part of your IT budget, have a look at your company’s data from previous years. Seeing how much has been spent on support and maintenance in the past can help you assess the amount to be allocated. However, keep in mind that glitches and breakdowns are unexpected by definition. That’s why many businesses prefer to reduce risks and spread costs over time by outsourcing their support services to an IT managed service provider.
Hardware and software
Another big chunk of your IT budget goes towards hardware and software. Updating hardware can be very expensive, which is why a growing number of organisations are opting for cloud-based alternatives. In fact, research by Gartner reveals that companies planned on spending as much on cloud-based and hosted services as on conventional hardware and software in 2018.
The software you need to budget for includes any SaaS applications and licenses that your organisation uses. As this is an existing cost, it’s fairly predictable, though you should also keep in mind any software your company is interested in using in the future when setting your budget. Cloud services you might need to include in your IT budget consist of things like web applications and your company’s contact centre.
Projects you might consider budgeting for include things like developing new solutions for your business that help you retain your competitive edge. While they may be a sizeable investment upfront, when planned with care, these projects can generate more revenue for your business in the long run. Your project budget might be very different from one year to the next. The most important thing is to work out an approximate cost for your projects in advance so you can work them into your IT budget.
Cybersecurity backup and disaster recovery
Here at Onestop IT, we strongly believe that you should make a strong investment in your organisation’s cybersecurity. Changing laws around data protection and the increasing risk of ransomware attacks mean that cybersecurity should be an increasingly high priority for IT managers. Despite this, many organisations are still failing to invest sufficiently in their cybersecurity, putting them at risk of unwittingly breaking laws and losing capital as well as their reputation in the event of a data breach.
In fact, a report by Cisco shows that following a disaster, 90% of companies will fail unless they have a business recovery plan. That’s why it’s vital that you make cybersecurity an important part of your IT budget. As cybersecurity is a complex field prone to quick shifts, one of the most effective ways to spend your cybersecurity budget is to let the experts take care of it. At Onestop, we offer a comprehensive, individually tailored portfolio of cybersecurity and backup services to protect your customers’ data and guard your business against ransomware attacks.
The tech industry is characterised by rapid change and because of this, it’s crucial to set aside some money for staff training. This allows you to take full advantage of the technologies your organisation uses as well as reducing employee turnover due to frustration or confusion around the tech you utilise. Training is also an important part of your cybersecurity, as the majority of data security breaches can be attributed to human error.
As you can never fully predict the future, you should allocate a portion of your budget towards discretionary spending. This will allow for any unforeseen expenses that may arise – think of this as your rainy day fund.
Lack of budget management can have a serious impact on your business
Having a well-planned budget not only gives you a good overview of your department, but it also allows you to see where you might be spending too much or too little. Without a budget, you may find yourself having to explain yourself every time you spend on the IT department, causing delays and forming significant overhead costs.
Keep on top of the latest news and tips for managing your IT budget by following our blog and check out our free IT resources. To find out more about bespoke IT support from Onestop IT, just complete our contact form and we’ll get back to you as soon as possible.