Let’s start by saying that your IT budget shouldn’t be calculated solely on the amount of money you can afford to allocate towards it.  What we mean by that is don’t just work out how much you have available to spend, then look at where you can spend it. There’s always something shiny and new to spend it on, and it’s not always the right thing for you. You’ll only know that after you’ve followed the next few steps.

Whilst not over spending is a top priority, cost shouldn’t be your initial consideration at all in the first phase of sketching out your budget. Your first task should be to build an aerial view of your business needs and every aspect of your current IT landscape. For that, you need department buy-in.

Whilst your IT department manages your tech infrastructure, all other departments in the business will live or die by its usefulness, so it’s got to be a team effort to get the budget and IT infrastructure spot on so that everyone can benefit from it.

To optimize your IT set up, you need to know what each department and team need to achieve day to day, week to week, month to month in order to retain happy staff, optimize productivity and provide the best products or services to your customers.

If the department head isn’t the right person to fill you in, an IT champion sitting in each area will go a long way towards making sure you are correctly budgeting for the needs of each.

This is somewhat stating the obvious, but each departments’ needs should then not just be viewed in isolation but merged together and considered as one vast requirement.

Once you’ve completed a full audit of your business needs, only then should you investigate the technology solutions available to fulfil them. A good service provider will only want to sell you what you really need and discuss the varying cost implications of each. This isn’t about leaving cost to chance.  This is about making sure that you plough all your available budget into the solutions you need, rather than just all the solutions available.

Best Practice for IT Budgeting, Blue Saffron

Common Mistakes

  • Preparing the IT budget in isolation, without a clear understanding of enterprise or business unit strategies and objectives.
  • A fixed budget which lacks flexibility to fund the right things when required but also scale back when the opportunity arises.
  • Investment decisions which aren’t based on a solid understanding of financial ROI of each solution.
  • Decisions based on the goals of individual departments, viewed in isolation.
  • Considering products, not solutions for your business.
  • Viewing security as an add-on and not the foundation of your infrastructure.

Recommendations 

  • View IT budgeting as part of the overall corporate strategic plan. Work closely with department heads to understand what they need to execute on their specific objectives.
  • Make IT budgets flexible and agile. This means prioritising key initiatives, not individual line items of spending.
  • Leverage a solid business case process to ensure that all IT investments are driven by value to the business. Do this by being able to talk fluently about how IT supports important business initiatives, operational excellence and revenue growth.
  • Leverage a solid business case process that doesn’t just focus on Capex vs Opex, but rather looks at value, return, technical and operational fit, and any risks posed. See below for an easy guide:

 

Sample Investment IT, Blue Saffron

Ps. To ensure that the IT budget aligns with the corporate strategy, technology leaders need full transparency of the strategy as it is being developed. Thankfully, more and more businesses now realise that these roles need a seat at the table with other key functions such as CEO and CFO to achieve this.

Knowing how to develop a budget slide deck to demonstrate IT value can be really helpful in this instance. Here’s some great advice from Gartner (2014)

IT Budget Slide Deck to Demonstrate IT Value 
 
 
Six Key Slides to Include 
 

1

List a half dozen of the most important enterprise strategies and objectives — growth in certain markets, new product introductions, customer retention and so on.

2

For each objective, list the initiatives that are intended to achieve it.

3

Describe what IT is doing in support of each of those initiatives.

4

Describe what IT is doing to improve its own operational excellence.

5

Raise any issues related to IT’s involvement in enterprise initiatives that must be resolved by the executive team.

6

Say “thank you.”

Since much of IT spending is delivered based on business needs, it is critical that the IT department understands any unplanned changes in the business before they happen. Often, such insight comes from your direct interaction with the other department heads and a full understanding of their part in the overall plan.

Finally, most business leaders keep a contingency fund to protect against potential issues. You should work with the business proactively to ensure that IT is guaranteed access to this fund if your goal is to make the business truly agile

How Are We Doing?

Our service is proactive, robust and industry accredited.

Customer Satisfaction - 98%
Response time under 1hr - 95%
First Contact Fix Rate 83%

TALK TO US | 0844 560 0202
CONTACT US

Related Articles