How to Create an Effective IT Budget for Your Business

How to Create an Effective IT Budget for Your Business

It’s important to have a budget in place for your IT expenditures. Otherwise, costs can easily get out of hand, and you end up paying more than you expected.

For example, if you don’t do your research and have a set budget for your cloud expenses, SaaS spending can easily get unruly, especially if employees are expensing apps that you haven’t officially approved for use with your cloud infrastructure.

The 2020 State of the Cloud Report found that approximately 30% of cloud spending is being wasted. Additionally, companies go over budget by an average of 23% on cloud spending.

When it comes to on-premises equipment, if companies don’t budget for regular maintenance and proactive managed services, then expenses can easily skyrocket due to things like breakdowns, malware infections, and downtime.

If you take the steps below, you can create an effective IT budget for your business that keeps your spending in check but also allows you to grow.

Steps for Creating an IT Budget

Review Last Year’s IT Budget vs Expenses

Your first step to creating next year’s IT budget is to see how things went this year. Look at what you budgeted for IT (if you did have a budget) and compare that to your technology expenses.

You’ll want to identify whether or not you budgeted enough for IT or whether the items you did spend money on brought you a return (such as improved productivity or customer support capabilities).

If you went over budget, then look at the reasons why. Did spending happen because there were no guard rails in place for employees? Did you end up spending a lot on repairs for older equipment that you realize now would have been cheaper to replace?

Review Cloud Subscriptions, Look for Redundancies and Over Provisioning

One place that many companies can find savings in a budget is cloud subscriptions. Often, they are paying more than they need to be because of redundancies and overprovisioning.

Look for any redundancies in application use. For example, do you have Microsoft Teams with your Microsoft 365 subscription but are also paying for a Zoom subscription? Teams has full video and webinar capabilities, so paying for another video meeting service on top of that would be redundant.

Overprovisioning happens in two main ways:

  • You have more user subscriptions than users because licenses haven’t been managed correctly
  • You have a higher-level cloud subscription package than needed 

Review cloud use and look for areas of savings by streamlining and reducing waste.

Identify Any Technology That Needs Replacement

Once business computers get past about 4 years, their cost of ownership starts to increase significantly. A Microsoft study found that holding onto older computers costs companies an average of $2,736 per year per PC due to them being slower and requiring more repairs.

Look at your costs of device downtime over the past year. Downtime is often a hidden expense that companies don’t always factor into their IT decisions. But if a device is down, that means one or more employees cannot complete their work, which costs your business money.

Identify devices that are 4+ years old and have them checked by an IT pro, like B-Comp Services. We can let you know if they have a year or so more of usable life or if you’d end up saving money by just getting them replaced. 

Discuss IT Needs with Supervisors & Employees

One mistake that many business owners make is not discussing technology needs with their staff. Sometimes, just one improvement in a piece of equipment, like a printer, can make a huge difference in employee work efficiency.

Ask employees and supervisors if there are any parts of your IT infrastructure holding them back as well as what tech would enable them to be more productive.

Identify Goals for the Future

Technology evolves at a rapid pace, and often those transitions bring about more capabilities for companies to better service their customers and to run operations more efficiently. Cyber threats are also always evolving, which means it’s important to continually evolve your cybersecurity strategy.

Identify one or two main technology improvement goals that you have for the coming year and add that to your budget.

A large upgrade of your technology environment can seem daunting all at once, but if you create a budget and the steps to get there during the year, you can spread out the costs, making it much more achievable.

Set Budget Tracking Parameters in Place

For a budget to be effective, it must match your goals and actual spending. To keep additional costs from creeping in, put budget tracking parameters in place. This can be something as simple as reviewing a monthly budget versus spending report for your IT infrastructure with your team to ensure everyone is staying the course.

Get Help Lowering Costs for Your IT Maintenance & Management

B-Comp Services can assist your Denver area business with reviewing your IT expenses and help you save money on your technology in the coming year.

Contact us today to discuss your support possibilities. Call at 303-282-4934 or contact us online.