As the year comes to an end, the process of budgeting for the next begins. While this process can be tedious, the creation of a set budget is a key factor in understanding the economic status of a business. Mapping out the revenue and expenses is the first step to increasing profit, but a well-thought-out budget is good for more than just economic gain.
Components of an IT Budget
Budgeting for IT services is an incredibly important tool for prioritizing initiatives and providing direction for the business. Income is fairly predictable, and it helps to review the budget from the year prior along with income in order to determine how much money can be spent. Expenses for an IT budget have three main categories: staff, hardware, and software. In order to keep the budget as a tool for initiative, differentiating between ongoing expenses and project expenses is very important. Ongoing expenses simply refer to what needs to be spent in order to maintain the current state, while project expenses show what needs to be spent in order to start new projects and further a company’s economic progress. While both ongoing and project expenses include the three main categories, there are some key things to consider when mapping out an IT budget, specifically it’s expenses.
Staff generally includes internal staff, external staff, and recruitment. Spending on staff goes further than just a paycheck; resources available for staff members to use cost money. The average cost of devices(for example: a cell phone or laptop) provided by the company for the general staff to use varies wildly for a number of reasons. These reasons include the variety of devices needed, the lifetime of the devices, the maintenance of a device, and so on. There are many things to take into account when budgeting for staff, but always remember that how money is spent on staff will correlate with the levels of collaboration and productivity seen in any group.
Hardware spending will include costs for servers, support, contracts, client computing resources, network infrastructure, and anything else that might be needed to keep hardware running effectively. Determining the level of access to different pieces of potentially sensitive hardware will affect the devices provided to staff, and can influence the spending necessary for proper security. Removing unnecessary hardware and upgrading as needed will help with the compliance of an IT department to regulatory standards. Compliance is a huge factor in an IT budget, and will be discussed later.
Software includes licenses, subscriptions, support and maintenance contracts, and anything else that meets a department’s software needs. Similar to hardware, determining what kind of software needed to meet the needs of a business and maintaining that software has a major impact on money spent. One thing to consider would be the use of SaaS(Software as a Service) and other cloud computing resources to reduce costs of hardware. The flexible prices of SaaS solutions make it relatively easy to work into a budget while providing the necessary level of support.
Key Philosophy of an IT Budget
Balancing expenses is a huge part of creating an IT Budget, and there are a few things to remember when determining how these expenses are made in every general category.
Compliance with both industry standards and government regulations will be a determining factor for making expenses. Failing to comply will not only give the business a poor reputation, but it may also face the business with heavy fines and reparations. Sacrificing desired expenses in order to invest enough in compliance is easier than rebuilding a business that failed to comply. With this in mind, the effects of compliance on a budget are not inherently negative.
Security is also a huge factor when creating an IT Budget. Like with compliance, diligently providing adequate security is often easier than recovering from a preventable breach that gives the business a poor reputation. The use of VPN networks and other methods of data encryption are simple and easy ways to provide better security. On the other hand, some form of security breach or data loss is inevitable as neither hardware, software, nor staffing are perfect. Therefore, while it is important to devote spending to security, it is also important to devote spending to recovery. Implementing backups and redundancies will strengthen recovery, along with using software services like the Cloud.