How To Budget For IT

IT Consulting IT Planning & Recovery Managed IT

by - December 4, 2023

For your business to stay competitive, establishing an effective and efficient IT budget is essential. It goes without saying that your business depends on technology to survive, but your budget is also a tool to optimize available funding and allocate it in a way that supports your overall IT strategy. Budgeting effectively will save time and money spent on unplanned IT needs that inevitably arise in the absence of a transparent and well-thought-out plan. The process of creating a budget should help you identify deficiencies and reduce waste, as well as forecast, prioritize, and justify strategic IT expenditures. Your budget shouldn’t just be an IT “wish list.” It should serve as a blueprint to ensure funding for initiatives that align with your company’s long-term goals. 

So how do you go about creating an IT budget? 

Identify Your IT Inventory

Efficient budgeting begins with a comprehensive assessment of your current IT resources, including an inventory of hardware, software, network infrastructure, services, subscriptions, and staffing. Identifying your existing resources (along with your technical debt) is fundamental to budgeting for the future. Previous budgets can serve as a baseline and a tool–learn from the past, but don’t be afraid to make changes to support evolving business goals.  

Set Clear IT Objectives

Now that you have a clear picture of what you have to work with, it’s time to establish your IT objectives. What do you want your technology to achieve in the coming year and beyond? Your objectives might include enhancing cybersecurity, upgrading hardware, improving customer support systems, or implementing new software. A careful examination of previous years’ budgets likely brought to light areas of overspending and technical debt. Setting clear objectives will make it easier to trim fat and allocate funds more effectively.  

Prioritize and Justify IT Initiatives

Which IT investments are essential and which are nice-to-haves? Are there significant projects in the coming year that require technology upgrades or additional IT support? Spending should be prioritized to reflect the objectives you’ve set. Be prepared to clearly communicate your IT strategy, its impact, and the projected ROI of your initiatives. Present a cohesive plan and be able to articulate how your proposed budget will support overall business goals.  

Allocate Resources To IT

Divide your IT budget into categories, beginning with ongoing expenses. This should include the following: 

  1. Hardware: servers; computing equipment, for in-office and remote workers; and network infrastructure
  2. Software: subscriptions, licenses, and support contractss
  3. Personnel: both employees and outsourced staff, and expenses related to recruitment
  4. Security: cybersecurity should be a significant component of your IT budget. Security threats are ever-evolving, so allocate funds for regular security assessments, employee training, and the implementation of robust security tools. 
  5. Training: employee training is often the first thing to go when budgets get cut, but knowledgeable employees are essential to maximize the value of your tech investments.  

Your project-specific expenses should also be outlined in the same way, including any consulting fees, contract staff, and administrative costs, along with additional office space, hardware, and software required. Be realistic about costs and allow some wiggle room for unexpected expenses that may arise. Identify future investments needed to support your overall IT strategy. Leave room in your budget for scalability, including necessary upgrades and expansion of IT support staff. 

We coach our customers on the 2-3% rule for IT budgeting. If you are trying to maintain a steady state, budget 2% of your top line revenue to go toward IT. If you are looking to grow, changing business strategies or preparing for a large change in your company, budget 3%. Of that 3%, ~50% should go toward managed services and labor and ~50% on cloud licenses, your internet service provider and new hardware. 

Leveraged Managed IT Services

Outsourcing some of your IT needs to managed IT service providers can help control costs and ensure you have access to expert support when needed. Proactive monitoring and network maintenance will reduce unexpected spending and provide peace of mind.  

Budgeting for IT isn’t just about managing expenses. It’s about investing strategically to drive business growth and improve efficiency. Your budget ensures that your technology aligns with your business goals. A well-structured IT budget is your roadmap, and a vital tool for success in the digital age. 

Related Posts

Why Password Management Matters 

Did you know that the simplest, best defense against cyberattacks is a solid password? From business logins to online banking to email, passwords are the keys to our digital lives, and therefore valuable targets for hackers. Knowing how to create, manage, and protect passwords isn’t a “nice-to-have;” it’s critical to safeguard your information. 

You might be shocked at how easy it is to obtain your personal login information, and you probably won’t know it’s happened until it’s too late. The dark web–that hidden corner of the internet–is teeming with stolen credentials. Hackers access compromised passwords through data breaches, phishing scams, and malware attacks, then put them up for sale to anyone willing to pay. This makes strong password management, including the use of secure passwords and two-factor authentication (2FA) more important than ever. 

Creating Secure Passwords: Length, Complexity, Uniqueness, Unpredictability

No, “password123” definitely won’t cut it. Neither will the use of birthdates, pet names, or other personal details you may have used previously to answer security questions. Secure passwords should be long (think 12 characters at a minimum), complex (a mix of numbers, letters, and symbols), and unique for every account. The best way to create a password that’s easier to remember is to use a “passphrase,” a series of words or a sentence, rather than a random string of letters and numbers. It can feel overwhelming to keep track of so many passwords, and why many people fall into bad habits like repeating passwords in multiple places, writing them down, or choosing overly simple options. No matter how good a password is, if a hacker gets access to one, they’re likely to try the same password on other platforms, leaving you vulnerable to a more extensive breach.  

Password Managers

Password managers like LastPass can store complex passwords, so you only need to memorize one master password to access the others. Serving as a personal vault for your digital keys, a password manager offers the convenience of auto filling your login details, generating random, hard-to-crack passwords, and notifying you if a saved password appears in a data breach so you can promptly change it. And most password managers sync across devices, so you always have access to your logins. When choosing a password manager, look for features like encryption, ease of use, and compatibility with your devices.  

Adding a Layer with 2FA

Two-factor authentication is like adding a deadbolt to your front door. With 2FA, logging in requires both your password and a second form of verification, like a code texted to your phone or generated by an app. That way, even if someone manages to get ahold of your password, they’ll still need that extra code to access your account, making it more difficult for hackers. Many platforms now offer 2FA and enabling it wherever possible provides a powerful layer of protection. 

Keeping Up Good Password Hygiene

Password management can feel tedious, but regular password changes, avoiding reusing passwords across sites, and using a secure password manager makes a world of difference. Think of it as a routine task, like updating your software or cleaning out your inbox. The steps to secure your passwords and add a second layer of protection are relatively easy and ensure that you’re doing your part to keep both your personal and work-related information safe. 

As data breaches become more and more common and cyberattacks more sophisticated, securing your passwords is one of the smartest moves you can make. It’s just a piece of the larger cybersecurity puzzle, but it’s essential for keeping the doors to your digital information locked. To learn more about how Nessit can help your business protect sensitive data, train and educate employees, and implement password management best practices, get in touch. 

How an IT Managed Service Provider Can Benefit Municipalities

Municipalities face unique challenges when it comes to managing IT infrastructure. From safeguarding data to maintaining compliance with local and state regulations, effective IT management is necessary to ensure municipal operations run smoothly. Budget restrictions can make it difficult to fully staff an IT department that can meet the complex needs of schools, fire, police, planning, clerks, and more. Partnering with a Managed Service Provider can offer valuable support in navigating these challenges through scaled IT solutions that fit your specific needs. 

Municipal Case Study

How can managed or co-managed IT help your municipality? 

  • Comprehensive Cybersecurity 

Because of the sensitive information involved, government organizations are prime targets for cyberattacks. A data breach can compromise citizen data, disrupt essential services, and cause widespread harm, making comprehensive cybersecurity a priority. MSPs provide proactive security measures, including employee education, advanced threat detection, continuous monitoring, strong encryption protocols, and disaster recovery planning. By staying on top of emerging threats, your MSP can ensure that government data and systems remain protected. 

  • Regulatory Compliance 

Government agencies have to adhere to a wide range of regulations related to data security, privacy, and accessibility. Failure to comply can result in hefty fines, legal challenges, and loss of public trust. An experienced MSP will understand the complexity of these regulations and ensure that your organization remains compliant by offering guidance on best practices for data management and implementing policies that meet regulatory standards. An MSP with expertise in navigating the regulatory landscape will allow government agencies to stay focused on their core mission without the added burden of managing compliance.  

  • Improved Efficiency and Productivity 

Efficient IT infrastructure is essential for government organizations to maintain productivity and reduce downtime. A proactive MSP can conduct regular audits to assess IT maturity, address potential vulnerabilities, and optimize performance. Timely support to resolve technical difficulties will enhance day-to-day productivity and ensure the smooth delivery of essential public services. 

  • Cost-Effective IT Management 

Budget constraints are a common concern for government organizations. Partnering with an MSP can be a cost-effective solution by providing access to expert support and supplementing in-house IT staff. An MSP can manage your equipment and licensing, eliminating wasted spend on unnecessary technology, and freeing up valuable resources that can be directed towards other priorities. 

  • Scalable Solutions 

As government organizations grow or their needs shift, IT systems should evolve accordingly. An MSP can offer scalable solutions that seamlessly adapt to your changing needs, whether that means expanding IT infrastructure, integrating new technologies, or enhancing cybersecurity. By providing flexibility and a customized strategy, MSPs ensure that IT systems can scale up or down with your organization. 

  • Reliable Support and Expertise 

Government organizations in particular require reliable IT support to provide uninterrupted public services. MSPs deliver 24/7 monitoring and support to make sure any IT issues are addressed swiftly. From routine maintenance to emergency troubleshooting, MSPs help prevent downtime and keep services running smoothly. 

Partnering with a Managed Service Provider offers many benefits for government organizations–who need reliable, secure, and effective IT systems to fulfill their mission. From robust cybersecurity to regulatory compliance, cost-effective management, and scalable solutions, an MSP can provide tailored solutions to meet your unique needs. By outsourcing IT management to trusted experts, your government agency can focus on serving the public, confident that their infrastructure is in good hands. Learn more about how Nessit’s services can benefit your organization. 

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IT Case Study: New Hampshire Municipality

Municipal governments are responsible for managing and delivering a wide range of essential services in the communities they serve. For all the departments involved to function effectively–from police and fire to social services and public works–a secure and reliable IT infrastructure is essential. The technology necessary to safeguard sensitive data, enable seamless communication, ensure compliance and accessibility, and keep large networks running smoothly can be difficult to navigate.  

At Nessit, we understand the unique needs and challenges that can make IT management complex for local governments. Experience has taught us that these clients often have to contend with budget constraints, aging infrastructure, unnecessary or redundant technology, and–most crucially–the threat of cyberattack. Effective management requires a trusted partner who knows how towns run and can see the big picture while meeting the client where they are.  

So, when a New Hampshire town became dissatisfied with their longtime IT vendor, they went looking for a second opinion. We were one of three managed service providers to submit a bid with remediation plans, and our bid was selected to become this municipality’s IT vendor. 

How did we create a custom proposal for their specific IT needs? First, we took a close look at their current infrastructure to identify and prioritize the issues we’d need to address. We also spent a lot of time listening, so we could begin with a thorough understanding of how the municipality worked and where their system was failing them. We came up with a comprehensive plan to fix the immediate problems, within budget, with the long-term goal of IT maturity. We assured them that Nessit would be an extension of their team and a partner they could count on to pick up the phone when they called.  

The Problem

The municipality’s IT environment wasn’t well-maintained, and because their tech infrastructure had been cobbled together, different departments couldn’t share resources or communicate with each other. The Water and Police Departments couldn’t talk to City Hall; the Highway Department didn’t have high speed internet, while the library was paying for internet they didn’t need. The town had no centralized print services, and employees were sharing login credentials and using a variety of cloud providers. File sharing was an issue, so that sometimes the employee at desk A couldn’t see updates from the employee at desk B. All of this created unnecessary complexity, with too many disconnected silos and no cohesive IT strategy. This system also left the town more vulnerable to cyberattacks, which is a growing problem in New Hampshire. The client needed an MSP who understood dispersed networks and could design and implement a unified IT infrastructure. 

How Nessit Fixed It

First, the system upgrade that their previous MSP attempted had to be reversed and re-done. Nessit reconfigured their server, putting together a unified stack to replace their piecemeal system. By centralizing services, all departments now have high speed internet and can easily communicate and collaborate. We provided everyone with their own login credentials–a crucial factor in improving security.  

Our job was to make their jobs easier by implementing technology that works seamlessly, requiring very little support and eliminating the downtime they had experienced while waiting for help. As the municipality’s budget increased, they asked Nessit to improve efficiencies in other environments, upgrading systems, networks and workstations. Our team ensured that all data was backed up and put a failover system in place. We created a data retention policy to reduce risk and ensure they maintained compliance with regulations.  

Most importantly, we built a personal relationship with the client, showing them what a true partnership is by listening to their questions and responding quickly to issues that arise. Our work is ongoing, and we continue to move the municipality towards IT maturity, spacing work out to fit their allocated budget.  

At Nessit, our clients’ success is our success. Every municipality faces different challenges and IT solutions need to be tailored to their unique needs. A Managed Service Provider should have a thorough understanding of dispersed networks, how towns run, and how to invest wisely in IT while respecting budget constraints. The need for robust security to counter the ever-growing threat of cyberattacks is critical, and often underestimated until a breach occurs and it’s too late. Nessit’s comprehensive management includes everything from employee education on security best practices, disaster recovery and continuity planning, and 24/7 monitoring. An MSP can provide a wealth of benefits for municipalities, ensuring smooth day-to-day operations so employees can focus on their core duties–ensuring safety, wellbeing, and quality of life for their community. 

If you’re a local government administrator looking for efficient, cost-effective IT solutions and support, we would love to put you in touch with other towns so you can hear firsthand how they’ve been positively impacted. Contact us. 

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