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How To Budget For IT

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. 

Business Continuity Plans for IT, and Why Your Business Needs One

Running a business means having a lot of plans – business plans, marketing plans, growth plans – but what about a business continuity plan? Your business continuity plan includes details on what you do if something goes wrong at your business. This could range from natural disasters to cyberattacks to hardware failures. You want to be prepared for anything that could go wrong, which will save you time and money in the long run.  

When it comes to your IT systems and data, having a solid business continuity plan helps you deal with issues when they arise and keeps your business on track. We know most people don’t think about their IT systems on a daily basis (except us) until it breaks down. And when that happens, what do you do?  

What Happens When IT Systems Fail?

As a business owner, do you know what steps to take if your IT systems suddenly aren’t working the way they should?  

Think about it:  

  • If your file server goes down and no one has access to company files, do you know what to do? 
  • Do you have a plan in place if one of your remote staff suddenly quits, and you need to retrieve your company equipment?  
  • How do you recover if someone on your team falls victim to a phishing scam and your company experiences a cyberattack?  

You may be thinking, there’s such a small chance of any of this happening that you’ll just deal with it if it ever happens. You can absolutely take that chance. But while you’re dealing with it when it does happen, your business will be at a standstill. You may not have access to your company data, finances, files, email, and more.  

Having a business continuity plan in place means you’ll know who to call, what to do, and how long it will take to get back up and running. You’ll know exactly what to do, and exactly what to tell your employees and your customers / clients.  

What does a business continuity plan include? 

1. Inventory of equipment and IT systems – Understanding the full scope of your IT systems is a crucial step to creating a business continuity plan. 

2. Threat analysis and risk assessment – Depending on what type of business you have, threats come from different directions. Knowing where those threats and risks may come from is necessary to create mitigation and recovery plans.  

3. Mitigation activities and strategies – There are steps your business can take to reduce risk (like providing cybersecurity training for employees), which may be required to get insurance coverage. 

4. Data backup and recovery plans – Having regular backups of your data can help get your business back up and running quickly if you lose access or data is accidentally deleted. 

5. Alternate work locations – One silver lining of COVID was the way companies adapted to a fully remote workforce. In your continuity plan, define alternative work locations for your employees to ensure your customer is taken care of. For those requiring physical plant, this may be developing key relationships within your industry to set up shop temporarily. 

6. Contact information for key personnel, suppliers, and IT teams (like us!) – Knowing who is in charge of your various IT systems and who to call will help expedite the process to get your business back on track after an issue.  

Once you create your plan, put it to the test! Once a year, spend a day scenario planning. QuickBooks has stopped working and all company financial data is missing. You realize someone or something has deleted the ‘Finance’ folder from your server. Was this an accident or is my business in the middle of a cyberattack? 

Most of the businesses we work with are not experts in IT, and that’s where we come in. We can help you create and implement a business IT continuity plan for in-house and remote teams. We can be your IT partner to ensure your systems stay up and running, and we’ll take care of your business if and when those systems go down.  

Let’s chat about your IT needs!