Your IT Budget Says a Lot about Your Business

Budgeting anything can be difficult, but with many business’ organizational reliance on information systems, finding the money to get your IT initiatives off the ground can be a challenge. That hasn’t stopped the IT sector growing fast. In fact, IT spending in business is at its highest levels since 2007. Let’s take a look at how your IT budget actually helps keep your organizational technology initiatives moving forward.

Business, Reimagined

We often talk about the benefits organizations see from investing in technology. In effect, the integration of targeted technology can go a long way toward changing the way that your business operates. Since a budget isn’t necessarily a ledger designed to manage every dollar and cent your business uses, having the right mindset when creating it is important. If you go into your budget resenting the capital you propose to spend, you likely will have a more difficult time creating one that works for your company. After all, your budgets are business tools, that if completed competently, a properly formed budget can really put your business on a fast track to success.

What Does an IT Budget Do?

Like budgeting for any other reason, the IT budget is the process of allocating money to fund the programs a business undertakes. Most of the IT budget will be taken up with recurring costs that come with the technology that your business already uses, including hardware and software support, software licensing, and the like. Since most line-items on an IT budget are just reaffirming familiar costs, you may only be using your IT budget as a wish list for funding new technology.

The typical IT budget covers two major expenses for a business:

  1. Ongoing IT expenses
  2. Project expenses

As far as the ongoing IT expenses go, this makes up every dollar your business plans on paying for the IT it uses day in and day out, the support and management for those machines, and any other expenses that will be necessary to account for as they pertain to your organization’s IT.  Examples of ongoing IT expense include:

  • Hardware (servers, workstations {and any other client}, networking hardware, cloud subscriptions, support and management)
  • Software (licenses, cloud subscriptions, support and management)
  • Staff (internal IT support staff, remote IT support contractors, and recruiting costs.)

Project expenses are any expenses that a project would further cost the company. These include:

  • Any outsourced consulting and/or management service costs
  • Any administrative costs (e.g. any new infrastructure or temporary development platforms)
  • Any special software
  • Any special hardware

More sophisticated organizations could try to incorporate certain IT-related costs into their departmental budgets, using what are known as chargebacks to officially itemize these expenses. This method can get much more convoluted, but it may be an ideal way to successfully prioritize expenses.

Why Do You Need an IT Budget?

Regardless of what your organization uses its IT for, there is a good chance that it is a core part of any budgetary coordination your business will do. The IT budget allows a business to itemize (and earmark) capital specifically for IT-based initiatives. In doing so systems that automate tasks, provide a reduction in operational downtime, and ultimately run your business from top-to-bottom have the necessary funding behind them, rather than having to have managers justify every IT expenditure to their superiors; a venerable nightmare for any manager looking to maintain productivity.

Another reason is that organizations are going through somewhat of a culture shift at this moment. Businesses are removing antiquated technology and processes for ones that are more computer-driven–even automated–and are using new tech to fill in gaps in workflow. Ultimately, the addition of high-end technology is used to drive down costs (typically from bloated payrolls). With this shift, the technology they purchase, lease, or rent, will have a major effect on the future success of the business.

Lastly, a comprehensive budget can allow for services to fill in the gaps where capital investment can’t be made. Cloud services, managed IT services, and managed security services are all extremely popular products for the modern business. Since services are budgeted as operational costs rather than capital costs, the cost is distributed, and therefore is more affordable.

If you are looking for budget help, or simply a consultant to bounce your IT initiatives off of, call the IT experts at TVG Consulting today at (818) 579-7370.