When constructed correctly, an IT budget can help IT leaders use the budgeting process as a tool to aid in communication and planning. This budget acts as a backbone for company activities and provides the resources necessary for plans throughout the year. Creating this budget is not all that different from budgets in different departments, yet many companies still struggle with it. A common approach is to look at it as an investment in the future of your business. Continue reading to learn how to properly create an IT budget to ensure the survival and growth of your business.
Be Aware of the Budget Calendar
Knowing when everything is due is a key aspect in budget planning. Understanding the process will ensure you meet all deadlines and account for every necessary finance.
Review Prior Budgets
By looking at past budgets, you can gain an understanding of what was included in the budget in other years. Typically, budget numbers need to be justified so that everything makes strategic and logical sense.
The budget should reflect the department’s goals and the overall IT strategy. Identify a handful of priorities for the coming year. This will help you decide where to save money and where to focus major spending.
Properly Address Spending
All IT budgets should contain information related to three categories of IT spending: capital, operating, and project. Capital expenses include hardware purchases, software licenses and upgrades, and parts replacement. Operating expenses are associated with operations such as subscriptions, maintenance, and both hardware and software support. The project budget is meant for incentive specific expenses. They are the most flexible part of the budget and can be changed based on the rest of the budget and any events that may occur.
Identify Types and Categories
IT budgets are often lumped together as one individual entity. By identifying type and category within the budget, decision-making and general planning will be better supported.
What Should the Budget Identify?
Besides the standard expenses that come with any department, IT specific costs should include the expenses for hardware, software, subscriptions, and services. For hardware, that includes equipment, installation costs, and all warranties that are included in hardware expenditures and it can be simplified as the cost of owning a physical asset. For software, that includes software licenses and support contracts, which are typically a set price over a set period of time. For subscriptions, this category is fairly broad as they can have a fixed price or a variable price/time period and include costs related to hardware, software, or training. Finally, for services, this includes all costs related to IT operations and initiatives such as advisers, consultants, service providers, and legal counsel.
Once you have got your budget for your IT department laid out, you now have a functional roadmap to all project operations. Anyone can see where funds are being allocated and it is clear what resources will be available for any given project. For expert assistance with your budgeting, contact Daytona Beach’s leading IT support company, Vann Data. We provide a wide array of computer services and IT services to accelerate your business success through technology.