6 Best Practices for Efficient IT Budgeting
IT budgeting is essential in ensuring the efficient performance of an organization’s IT infrastructure. However, it can be an extremely painful process for many business organizations. Due to the immense challenge it presents, executives are sometimes tempted to tweak the previous year’s budget, which is not the best strategy. To help make this process less painful, Outsource IT has compiled a list of best practices which will enable any business organization to create an efficient IT budget with fewer headaches.
Start with an Audit
Every good budgeting process starts with an audit. An audit looks at the previous year’s budget to assess its practicality in the coming year. It identifies the following information:
- Existing architecture (who uses what and how often)
- Applications and updates installed in previous years
- Necessary updates, upgrades, and replacements
- Potential issues and problems (e.g., security threats)
Once the team has this information, it can be used as the foundation for the new year’s budget.
Identify Goals and Objectives
Technology is constantly evolving. Last year’s IT infrastructure may need to be updated this year. However, justifying these updates—especially when current systems are still performing in acceptable ranges—can be difficult. By identifying the goals and objectives of the budgeting process, the budgeting team can establish their priorities. These can then be aligned with the organization’s overall business goals, which is the first step in simplifying the IT budgeting process.
Analyze Known IT Issues
Once goals and objectives have been identified, the budgeting team should analyze known IT issues and problems that need to be resolved. Here are some examples:
- Outdated security software which is or could become susceptible to data breaches and cyber-attacks.
- Older equipment which might be prone to operational problems (e.g., delayed response time, poor reliability).
- Lack of training on newer systems which could lead to a skills gap, and result in unnecessary downtime during troubleshooting.
In addition to this, it’s important to study the current IT landscape. Most developers announce plans for new software and hardware months before launch. The budgeting team should determine which of these are necessary for the organization’s IT infrastructure and include them in the budget. IT budgeting should also identify the necessary training programs the IT staff needs to attend in the coming year.
Review Previous Budgets
IT budgeting is a constant process of revising and updating plans. The budgeting team is advised to review budgets from previous years to understand how the money was allocated in the past. The team can then determine if these budgets were helpful to the organization and its operations.
- What was done well? Identifying the successes of previous budgets allows the team to forecast how well the planned budget will perform.
- What mistakes were made? Identifying the failures of previous budgets allows the team to avoid the same mistakes in their planned budget.
- What was changed? Analyzing changes to previous budgets can provide the team with the historical data to justify certain purchases in the future.
By reviewing previous budgets, the team can formulate a better budgeting strategy, identifying which items to replicate or update, and which ones to leave out.
Monitor and Measure Results
Once the budget has been finalized and implemented, IT executives, in coordination with the finance staff, should monitor and measure project performance and plans. This is to ensure that the plans developed and approved for implementation are being followed. Doing so improves accountability and transparency in the organization as well.
Adjust the Budget Accordingly
Monitoring and measuring the budget in real-time will determine any changes that need to be made. IT executives do not have to wait until the next budgeting cycle to make the necessary adjustments. Delaying these might result in future problems. Adjusting the budget:
- Realigns the budget’s initial plan with the new goals and objectives.
- Reduces unnecessary expenditures that can impact future budgeting cycles.
- Reallocates funding towards unforeseen but necessary expenditures (e.g., additional notebook computers, data and recovery software, etc.).
Although a lead department may oversee and manage the IT budgeting process, every department in the organization should have an input in the overall budget. Getting everyone involved provides valuable insights that the IT budgeting team can use to create a more effective budget.
- By including the finance department, finance and accounting professionals can check if the team has taken into account all aspects of the budget, including emergency expenses for repairs and other unforeseen circumstances.
- By including all department heads in the conversation, the IT needs of various departments can be identified, which can improve overall efficiency.
By making the process collaborative, the final IT budget is more inclusive. This approach also gives all the department leaders a glimpse into the annual IT investment that is essential for the organization’s growth and performance for the coming year.
It is also never a bad idea to get help from IT experts experienced with IT budgeting, such as Outsource IT. Our exceptional consulting services aim to help clients make the most out of their IT infrastructure. Organizations looking for help in improving their IT budgeting process can benefit from this service—whether to identify waste, items missed entirely, or to learn how they can improve the process. Get in touch with an Outsource IT account manager to learn more.