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3 Vital Steps for Building An Effective IT Budget

3 Vital Steps for Building An Effective IT Budget

In the current economy, it’s all about that bottom line. Businesses must operate cost-effectively. 

A well-planned IT budget is key for any business that wants to operate successfully as it helps set expectations and ensures funds are allocated quickly for time-sensitive projects. Technology spending requires thoughtful consideration, and many organizations struggle to land on the right number.

Maybe you’re spending too much on IT for the size of your business? Or maybe you’re not dedicating enough for your operations to run as efficiently as they could to generate more revenue?

A well-thought-out budget will help you get the most out of your IT resources.

How to budget and plan for IT

Here are three easy steps to follow in order to create an IT budget that’s perfect for your business: 

1. Perform an audit

In order to plan for your ideal future IT budget, you have to know where you’re starting from. Take an inventory of all your IT assets as well as expenses related to staffing and recurring licenses for software.

The audit requires investigation and forethought into whether there are big projects coming up where you’ll be paying IT consulting fees, or maybe hiring a new employee altogether.

Factor everything you can into the audit to get a sense of where your IT budget is already spoken for, what needs to be added and where any gaps might be.

2. Determine what's right for you and the business

Now with an understanding of last year's IT costs and anticipated upcoming costs, you've got the basis to create a detailed IT budget that predicts future costs with a fair amount of accuracy. Have you considered every department's IT needs? 

A strong budget goes well beyond what's right for just the IT department.

Speak with other employees and managers who can help you shed light on where any business gaps are, discover potential technology upgrades coming down the pipe, and also identify project spend that already has their collective buy-in. 

3. Put your plan into action

This is the time to start thinking about where the priorities are and if your team’s expertise and technology stack is going to be able to cut it. Although it might seem counter intuitive to focus on what your competitors are doing, it can be useful for developing an IT budget to know how others in your industry are spending their IT dollars. 

Take a look at industry averages published for IT spend in your field. This exercise can identify areas of the business that you want to prioritize in your own IT budget in order to compete. Consider how other budgets in your industry stack up to your own. That will either help build the business case for additional spending, or it could lead you to explore external alternatives for meeting your IT requirements on budget.

As you build your budget, keep the company’s overall objectives in mind. Is keeping costs down that important this year or should you be growth-oriented and looking for ways to scale?

Answering these questions will help determine a budget that’s in line with the company’s needs.

Think outside of in-house

Creating an effective IT budget is often eye-opening and may have you questioning whether your in-house IT department can deliver on the various needs of the organization and stay within budget.

This is often when businesses start thinking about outsourcing IT as an alternative.

If you are ready to establish a sustainable budget for your business while also maximizing productivity and keeping track of initiatives, then you should definitely consider a managed service provider (MSP). The service can operate as an extension of your team, and help you to perform all IT activities for your business with more of a predictable spend.

An MSP is often the right answer for many businesses struggling to find the right balance for their IT budgets. For more information on how an MSP might work for your budget, reach out to the Quercus team today.