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7 Tips to Better Budget Your IT Department


The IT department is an integral but ever-changing part of today’s business. As technology evolves, the responsibilities of today’s IT departments change, going beyond maintaining software and services for clients and taking on such duties as cybersecurity or even creating applications to serve core business needs.

As the IT department continues changing, it may become increasingly difficult for businesses to create an annual budget for it, but it’s an important way to set goals, manage costs and keep you on track over the coming year. As you look at creating your IT department budget, here are seven tips to help you to take an effective, strategic approach.

No. 1: Give It Some Time

No budget should be rushed; you want time to truly evaluate your needs and look at what all is required. Getting it done correctly is more important than getting it done quickly. Talk to managers of different departments to make sure you have a full understanding of how they are utilizing the IT department and to see what other needs (or wants) they might have that aren’t currently being fulfilled, but could be with additional allocations to the IT department. The more input you receive, the more accurate and effective your budget will be.

This also gives you more time to think critically about your objectives and goals. What do you want your IT team to achieve? What would be considered a success? Thinking beyond the bottom line of staffing and hard costs and let your budget reflect what you truly want to see happen in the next 12 months.

No. 2: Get the IT Department Involved

All too often, business leaders make the mistake of creating budgets without talking to the departments that are affected. Talking to the IT department about what could be changing in the coming months and knowing how to budget for it allows you more agility as the year progresses. They can also help flag any plans that might need more resources than are being allotted and explain any technical hurdles your company will need to overcome.

No. 3: Consider Outside Resources

Freelancers and contractors are an effective way to augment your staff without taking on the costs of a permanent employee. As you look at company growth and needs, recognize that it doesn’t necessarily mean that you have to ramp up your hiring in order to fulfill your needs.

Look at areas where contractors can step in for specific projects rather than staying on staff full-time; this not only eases your bottom line in terms of salary and related employment costs, but also saves time and money in terms of management costs. It also could allow you to bring in a high-level specialist for a specific project that you might not have the financial resources to hire full time.

Outside resources can also include managed service providers, who can remotely manage your IT infrastructure and end-user system without the cost associated with a full-time staff.

No. 4: Leave Some Wiggle Room

As you create a budget, it’s common to allocate your entire budget for the year. Budgeting at less than 100% leaves room for adjustments throughout the year, such as new priorities, equipment or staffing. More flexibility with your budget allows your business to better adapt to changes in the market or business environment. Reviewing your budget every month allows for you to make adjustments as your situation changes.

No. 5: Focus on Your Business/IT Alignment

Making sure that your business goals align with your IT spend maintains a proper balance; business plans should help drive your IT strategic plan. Every business department should view technology as a part of its operations and look at how IT can help them reach their strategic and operational goals. Aligning your IT department with your business goals lets you leverage technology to best serve your business needs.

No. 6: Invest in Security

Measures to improve security should be at the top of the list for every business owner. Recent research presented by the tech firm GoDaddy found that small businesses are just as vulnerable to cyberattacks and security hacks as large enterprises. Perhaps even more notably, research has shown that 60% of small businesses that suffer a data breach go out of business within six months.

Even though the losses may be greater to a large enterprise, they are more likely to recover from an attack than small businesses.

With cyber attacks costing businesses between $84,000 and $148,000 per incident, investing in security is critical. It should have its own line item, not be an afterthought. You may want to conduct a risk assessment to determine what threats your current IT environment faces and let that help guide your budgeting decisions.

Because today’s businesses depend on being able to provide a secure environment for sensitive data, whether that data is internal information or customer data, this is one area where it doesn’t pay to cut corners.

No. 7: Use The Power of the Cloud

Moving to a cloud environment is a way to improve efficiency and cut costs. With less time and money dedicated to managing and operating servers, you can free up some of your budget while at the same time improving collaboration capabilities for employees. Using a Virtual Private Server in a private cloud is an option as well, and it can be deployed faster and more efficiently by an outside team.

Migrating to the cloud, whether you make a complete migration or choose to adopt a hybrid cloud option, can also be a good way to tighten security. Cloud providers recognize that customers depend on a secure environment and can seek out reliable, scalable options that can be adjusted as needs demand — without the costs that would be associated with such actions in a hardware environment.

Creating the right budget for your IT department is a crucial part of your overall business strategy. Make sure you give it the careful thought it deserves as you make it part of your big-picture strategy.