How to Prepare Your IT Budget for 2020

November 14th, 2019 | Business Operations, IT Consulting

From sales and marketing to legal and accounting, technology touches every part of a business. But as technology evolves and business needs change, it becomes increasingly difficult to budget for IT expenses. IT expenses shouldn’t be a surprise—however, many small to medium-sized businesses often underspend or overspend on their IT investments due to a lack of strategic IT planning.

Before you begin creating your IT budget

Before you can create an effective budget, you’ll need to evaluate your current IT landscape and assess the risks in your environment. An IT audit should take stock of your business’s IT infrastructure by examining its overall architecture and the applications installed in the environment. An audit should identify security concerns—calling attention to high-level risks that need immediate resolution as well as moderate and low-risk issues that should be addressed. An IT audit should identify your IT infrastructure’s problem areas and, along with your business’s goals in mind, provide a focus for the IT budget.

Preparing an IT budget

IT budgets should cover the entire organization and include everything that is a technology-related expense, regardless of which department uses the technology.

IT budgets should also document annual and monthly recurring expenses, as well as initial costs for any hardware installations or upgrades.

An IT budget should provide a cost breakdown of the following systems and services:

  • Hardware installation and upgrades (servers, routers, workstations, and other networking equipment)
  • Software licenses and subscriptions, including hosted applications
  • Cloud services
  • Internet and telephone
  • IT Infrastructure maintenance
  • IT salaries
  • Cybersecurity

Your company’s IT budget should outline 12 months of expenditures, including initial costs for new projects and ongoing costs related to maintenance. Even though your budget will only cover 12 months of expenses, look 18 to 24 months ahead to ensure your company is effectively budgeting for future IT projects.

Save now, pay later

IT budgets predict the funding that keeps the IT department—and your business—running. They’re a critical part of taking projects from conception to completion.
Typically, companies set aside a generic fund for technology spending that is used as IT needs it. This break-fix approach to budgeting often leads to overspending because IT has not taken the time to evaluate the current infrastructure or properly plan for new technology investments.

IT budgets keep a company’s overall technology spending in check. IT budgets also eliminate wasteful spending and non-standardization across the business. With a planned budget, companies and IT departments can track and anticipate spending and ensure that it’s aligned with business goals.

If you want to learn more about budgeting for your IT department, talk to our IT consulting team today!