Budgeting your IT expenditure

In the current economic climate we are regularly asked to assist our clients with their IT budgets, and specifically on which areas they could cut costs.

As with setting up any budgets there are two sides to the coin.

Firstly, we need to look at maintaining our current technological infrastructure. We call this the Operational budget. This is the annual expenditure to allow the client to operate and continue operating the current IT infrastructure.

Secondly we have to consider any investments into new projects or equipment.

1. The Operational Budget
Primarily, you will need to budget approximately 10% of the current value of your equipment for maintenance. It is a good idea to budget 15% to have a bit of a cushion in case of a huge system failure. These monies will go towards maintaining the current equipment (disk crashes, motherboards packing up, screens that need replacing etc.)

You will also need to budget for current maintenance and service contracts with suppliers. These include your IT maintenance or Managed Services provider (had to get that in first), printer and copier maintenance, PABX contracts, Least Cost Router contracts, broadband costs, cellular contracts etc.

Finally, make sure that you have made provision for all licensing fees that need to be renewed. This could include anti-virus subscriptions, server backup software and line of business applications (accounting software, CAD software etc.)

2. The Investment Budget
The investment budget deals with all new purchases and projects in the business.

Do you need to upgrade any Servers or PC's? Are you planning any special projects such as implementing VOIP or video conferencing? Implementing access control in your building or installing IP cameras? Are you planning on building a new web site or doing online marketing? All new purchases and projects need to be budgeted for in the investment budget.

If you are not certain of any of the two facets of yor budget you have a bit of legwork to do. Make sure that you have a detailed asset register of all your equipment and a replacement strategy for old equipment.

Talk to staff and find out what their IT pain points are. If there are any gripes with a current supplier, this would be a good time to consider a new partner or at least re-negotiating your current contract.

Budgeting this way wil allow you to have a nice steady expenditure on Operational Costs, mitigating the sawtooth effect of sporadic IT spend and have some leverage to get the important new projects approved.

As always, if you have any questions or need help, we are only a phone call away ..... 087 806 1330 or 0861 CLEVER

Regards
Arno