How to create an IT budget: Tips for planning ahead

1. Look at the previous year’s budget

The best place to begin is by looking at prior years’ budgets to establish a baseline from which to build from. This will show you how revenue and expenses change over months, quarters, and years. It can then be tweaked to reflect predicted changes and new priorities. For example, if you spent money on new equipment (such as desktop computers or a new server) last year, then you probably don’t need to buy those items again this year. You can also use last year’s budget to find recurring expenses easily.

2. Know the cost of your recurring expenses

Certain IT costs won’t differ much from year to year. So, considering any recurring costs will help when creating an IT budget. Some common recurring IT expenses include:

• Staff (inhouse, outsourced or both)
• Network infrastructure and security (data centre, backups, firewalls, VPN, cyber security, support, and maintenance contracts)
• Replacing or upgrading hardware and software (PCs, laptops, servers)
• Subscriptions and cloud services (productivity software e.g., Microsoft 365, data storage, video conferencing)
• Line of business applications (CRM, ERP, finance, marketing, and HR systems)
• Telecoms (voice, mobile, internet, data)
• Peripherals (printing spend, keyboards, mouse, headsets, cables etc.)

3. Establish any project expenses 

Get thinking… Do you have any major projects in the works? Maybe you are planning a large installation, an office relocation, a new website, or a recruitment drive? Is your business migrating to the digital world? If that’s the case, consider any setup expenses, licencing, training, more hardware, higher (or lower) IT support needs, and how much time it’ll take.

4. Talk to your employees

Your employees may have a better idea than you do about what upgrades you need. After all, they’re the people who use your systems, equipment, and applications daily. Take some time to talk to your managers and employees to learn more about what is working and what they would like to see addressed in next year’s IT budget.

5. Align your budget with company goals

The whole goal of a budget is to help you access the resources you’ll need to execute your business strategy. Before you start doling out funds, you need to work as a team, to discuss and define your overall goals and the best way to meet them.

6. Keep security in mind

According to Verizon’s 2020  data breach investigations report, the top 3 causes of data breaches are:

• Criminal hacking – where cybercriminals use stolen credentials
• Human error – where employees make an innocent mistake such as accidentally sending sensitive information to the wrong person
• Social engineering – where fraudsters pose as a colleague, supplier or director of the company and contact their victims with what looks like a legitimate request for money or financial details

With so many breaches caused by the lack of knowledge employees have about cyber security, your IT budget proposal must address how they are going to be safeguarded from cybercrime. Otherwise, all the time and money spent on your IT systems could be declared useless.

7. Don’t cut costs

When it comes to IT budgeting, it might be tempting to cut expenses by deferring or cancelling training courses that appear to be more of a ‘want’ than a ‘need.’ However, it is not worth the potential issues this might bring you in the future. An increasing reliance on technology to support businesses leaves them prone to breaches which can negatively affect your business.

8. Use data to make decisions 

When you present your IT budget proposal, you need to be able to show your reasoning behind each decision and demonstrate the benefits it will bring. This is why data comes in handy when preparing an IT budget. By gathering data and statistics, you are able to make a fair judgment of the benefits it may bring your business.

Investment in your IT operations will stand you in good stead to make 2022 a prosperous year. A well-considered IT budget ensures that you spend money wisely and by following these steps you can create a strategy that keeps you on the right track to reaching your business goals!

To find out how Capital Space could benefit your growing business,
call 0800 107 4667 or email info@capitalspace.co.uk