3 IT Budgeting Mistakes You Should Stop Making

10/24/14 10:23 AM iCorps Technologies

As 2014 comes to a close, IT organizations are reviewing the year for successes and areas for improvement; assessing staffing and assets; evaluating shifting work trends and user demands – all with an eye toward the new year.

Certainly, every company has different IT requirements. But when it’s time to plan your IT budget, there is some consistency in what NOT to do.

Want to drive your IT budgeting success? Here are the top three IT budgeting mistakes you should stop making:

 

1. STOP Procrastinating. If you follow a calendar fiscal year, you are probably deep into the planning for your annual IT spending review and budgeting for the new year. Or are you?

When it comes to IT planning, many IT professionals appear to be procrastinators. According to the Spiceworks 2014 State of IT Budget Report, 31% of the IT professionals surveyed have no standard budget planning date, and another 31% wait until the last quarter to begin their new-year planning. Not surprisingly, larger organizations tend to participate in more structured and proactive planning.

The Spiceworks report notes that in 2014, IT budgets averaged $253,389 and were distributed across four main areas: hardware (44%), software (31%), cloud (14%), and managed services. With the availability of new technologies, stricter industry regulations, and the increasing demands for secure remote access by multiple users and devices, that average is expected to increase for 2015 – which means there is a lot of money on the table if you plan ahead. As the saying goes, the best way to get something done is to begin. That goes for IT budgets, too.

2. STOP Forgetting About the Basics. Day-to-day IT operations take a lot of time – and not surprisingly, the tasks are disproportionate to the number of IT pros that are handling the many fire-fighting tasks in addition to ongoing systems administration. Companies with 250-499 employees have, on average, 4.8 IT pros on staff, notes the Spiceworks report. Maybe that’s why IT professionals aren’t getting to their planning.

With the recurring costs of staff salaries as well as warranties, space, power, outsourced services, and other components, IT operations represent a good chunk of money, too – more than half of the typical IT budget, according to the Spiceworks report.

So what’s the best way to approach a plan for IT? Keep an eye on these basic costs. Break them down first by month, then annualize them. And don’t forget to plan for emergencies too.

Stefan Lorenz, a German-based information technology and services consultant, offers prompts that can surface hidden costs, identify areas of growth (such as more users or locations that need to be supported), and opportunities for implementing newer technologies. These prompts include, “What is on-premise, what is in the cloud? How many clients and types of hardware/software need to be supported? Do you have more than one office, and how are those connected? Are you offering a web-based app or client portal that has to be secured and maintained?” User expectations and SLAs are factors too, “How long should it take to recover from a hardware failure? When and in which timeframe you expect a support reaction and/or technician?” 

For IT budget planning, the devil is in the detail – and so are the costs.waste-money

3. STOP Positioning IT as a Money Pit. Your company relies on technology to keep the business running – not only for internal processes, but for customer-facing practices as well. If your IT is not aligned with your business processes and goals, though, business leaders will begin to view IT simply is a cost center – diminishing its real value.

“IT organizations are challenged more today than ever to provide strategic value to the business,” notes Patrick Savage, PMP, IT consultant and principal at Savard Solutions. “This includes justifying and quantifying value and implementing transformative IT initiatives that can help the business trim costs while being more agile and innovative.” 

With more than half of the IT budget composed of fixed costs, there’s only so much you can do to operate more efficiently and optimize costs. But when IT professionals work with business stakeholders to understand how they use technology and their processes, that remaining IT budget can be put to work more strategically to provide significant benefits to the business: for instance, unifying communications and connecting an increasingly mobile workforce, automating business processes so that workers are more productive and efficient, and developing integrated processes and applications that improve the customer experience.

“The budgeting process should be very transparent to the business,” says Savard. “Nothing should be added, or reduced, without an associated business driver.” In the end, this approach links the IT budget directly to a business-aligned objective and enables IT to add value by using technology to transform the business with innovative solutions that drive better business outcomes.