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Budgeting is never easy – especially IT budgeting, which seems to be fraught with potential missteps and mistakes.
But, how can you make such a complex and sometimes confusing task a little bit more manageable? Take a look at our eleven best practices for creating an effective IT budget in 2020.
Conduct an Audit into Your Existing IT Infrastructure
You can't budget for IT if you don't know what you are working with currently. Begin the process with an effective audit of your existing architecture.
This will provide you with a solid foundation as you craft your budget.
Take a Considered Approach to Forecasting
Budgeting and forecasting go hand in hand. Your aim is, after all, to grow and evolve your future capability with support from your IT architecture. But, sometimes, to look forwards, we need to look to the past, as well as to the present.
How is your IT architecture currently performing from a financial point of view? What are your historical expenses, and how have these matched with previous forecasts? This will enable you to make a more educated and informed budget for your IT department.
Be Aware of Problems from Within
You will not be completely overhauling your IT architecture. Instead, you are likely to be adding new elements to an existing set of legacy systems and applications.
With this in mind, identify any potential issues that your legacy systems could call. Perhaps some are outdated and in need of refresh or complete replacement. Work this out early on, and factor this into the IT budget.
Make Sure Everyone Who Should Be Involved Is Involved
Great insight can come from a range of different sources, and it is always important to reach out to all of your stakeholders before you present your finalized IT budget.
Communicate with your user departments and gain their knowledge. What do they need from the new budget? What trends are they seeing in the business? What demands do they feel the IT department needs to meet? All of this is valuable information.
Set Your Key Budget Management Roles
Successful IT budgeting is the product of a number of different skill sets and areas of expertise. This is why you need key personnel in management roles as you seek to craft your budget.
What about the role of the CFO? What does this key role bring to the project? A CFO understands the financial health of the business – both current and forecasted – and they will be critical of shifts in budgeting plans or changes to the current investment status quo.
What about the CIO? What is their role? Well, the CIO must recognize the value of investing in information technology and be able to plan and strategize how this value will be achieved. Then, of course, they must view the project from the point of view of the CFO in order to gain their approval.
Consider Long-Term Objectives When Outlining the Budget
Your IT budget has to be effective in the long term, which means it needs to align with your long-term objectives. Perhaps you are looking to increase sales on key products you think are underperforming, in which case you may want to ring-fence some of your budget to the customer journey through your site to these product pages.
Remember that you should never be making seemingly standalone moves or moves without significance to the bigger picture. Instead, your IT budget needs to be supporting you on your way to realizing your long-term strategy.
Security Is Paramount
Ask anyone if security is important, and they will tell you, "Yes, it is." Yet, so many of us do not approach security with the gravity it deserves.
A study conducted by Spiceworks in 2019 found that as much as 59% of IT professionals felt that their organization is not budgeting enough for security investment. Do not fall into this trap; make this a key part of your own calculations when you budget for IT.
Consider Training, Education, and Development as Key Investments
It is tempting to try to reduce costs here and there, particularly when it comes to training, as this can quickly spiral out of control. In fact, IT budgeting is one long exercise in cost management and reduction. However, be very, very wary about making cuts to investment in education and training.
Cutting investment in these areas may simply be storing up trouble for further down the line.
Do Not Underestimate R&D
Everything might be going just fine, but what about tomorrow, next year, and in five years' time? Your research and development is what keeps your company moving forward and what keeps it competitive in the market. Do not forget to invest generously in R&D.
Be Bold in a Competitive Recruitment Landscape
It has been said time and time again that our personnel are our greatest resource. So, how do you make sure that you have access to the best tech talent on the market? It all comes down to your budget.
You may have already noticed that the current recruitment landscape is seriously competitive. If you are going to stand a fighting chance in this market, you need to put some of your budget aside to cover the high fees commanded by today's talent.
Keep the Project Ongoing
You have outlined a great budget, and you should be proud. However, the task is not complete. Your budget needs to be reviewed, appraised, and reassessed when required to ensure it is still fit for purpose. But that's what annual reviews are for, right? Well, not entirely. Only reviewing your budget every 12 months is going to leave you reacting to changes rather than staying ahead of the curve and could leave you at a serious disadvantage.
Review your budget based on the milestones your company achieves en route to its strategic goals, not at some arbitrary point on the calendar.
Would you like to learn more about effective IT budgeting and increased efficiency with professional and managed IT services? Get in touch with the team at Softlanding today
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