Your 2018 Budget: 7 Components of a Successful IT budget

As we gear up for 2018, IT leaders are turning their minds to budget planning for the New Year. Information technology (IT) demands continue to grow every year, yet CIOs and IT Directors are being asked to do more with less on a more frequent basis. Let’s take a look at some of the key things to consider when preparing your IT budget for 2018.
Building a Good Foundation: Get the Right People Involved and Encourage Accountability
The first step is deciding who to involve in planning and implementing your budget. This changes from company to company, but there are points in common no matter where you work. Ensure that you have upper management buy-in, whether that is the CFO, CEO, or both, who then can cooperate with the IT-specific folks (i.e., CIOs and IT managers). Good planning starts with good leadership; you won’t have that if the actual leaders don’t take active roles.
The other half of the process is to plan for everyone else to be involved at the ground level, so that costs are truly transparent. The average employee does not need to help directly plan their IT spend, but they should be made aware of how much they cost the company and be encouraged to reduce their inefficiencies whenever possible. This is often referred to as a Bill of IT. If you promote a culture of IT cost transparency, you can target and eliminate future inefficiencies before they occur. By encouraging accountability, your company will reduce IT spend, and therefore stretch the IT budget.
A realistic view of the budget’s target date is also pivotal to this process. Plan to spend up to 6 months on building two budget roadmaps: One for the next year and another for the 2-3 years after that.
7 Components of a Successful IT budget
So, with the groundwork done, you can now move on to the actual IT budget itself. What are its components? You’ll need to plan spending for at least the following elements:
1) Hardware – This includes consideration of all physical equipment and tools used for work:

  • Computers
  • Telecom equipment – landlines and mobile phones, etc.
  • Printers
  • Wiring (yes, that’s something we can’t forget to cost)
  • Other physical electronics

2) Software – All the programs that run on your devices. Remember that software firms are stepping up their software audits. Make sure that you’ve budgeted money to pay for any software you use – better to pay for it the first time around rather than be fined later down the road for using unpaid copies…
3) Subscriptions and Services – same as 2) but this category specifically applies for software that is licensed and paid on a recurring basis every month or annually instead of a software bought on a one-time basis.
4) Capital – Goods and/or non-financial assets used to produce the firm’s products.
5) Operations – The costs incurred while running a business (although in this case, it’d be the IT portion).
6) Projects – Costs associated with specific tasks.
7) Rainy Day Buffer – Lastly, money should be set aside for unforeseen expenses. They will happen, no matter how well we plan.
Follow-Through for Success: Stick to the Budget
So, you have the groundwork and the elements of your budget. You’re not done though. You have to also make sure you stick to the budget, and constantly check that your spend makes sense as new developments surface (i.e., a new disruptive technology, sudden market shifts, etc.). The budgeting process can only be viewed as a success:

  • If you keep your spending limited to your planned guidelines;
  • If you make sure your ROI on the IT spend is worthwhile; and
  • If you make adjustments in response to big changes.

Remember, just going through the motions of planning isn’t enough. Strange though it may sound, the budget should be viewed as a living thing more than as a static, unchanging decree.
I hope that this has been a useful bit of year-end advice. If ever you need more help, contact us at Cimpl. We’re leading the revolution in telecom, wireless, IoT and cloud expense management – we’ve helped companies manage IT expenses and stretch IT budgets for more than 15 years, and we know that we help everyone work smarter.

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