Top tips is a weekly column where we highlight what’s trending in the tech world today and list out ways to explore these trends. This week, we’ll discuss some must-know tips to plan your IT budget.
Budgets are an essential aspect of business that determine how different teams throughout an organization can enhance their functioning and the overall offerings of the business as a whole, however many businesses struggle with planning their budgets. Organizations walk a tightrope while planning their budgets for the fiscal year, especially when it comes to IT budgeting.
In today’s age, regardless of the services or products they offer, organizations are now compelled to invest in transformative technologies to elevate their businesses. This is due to the tremendous growth in the technology innovation landscape, marked by the introduction of generative AI and mixed reality.
The artificial intelligence market is anticipated to experience significant growth, with a projected compound annual growth rate (CAGR) of 37.3% from 2023 to 2030. By 2030, it is expected to achieve a market size of $1,811.8 billion.
This has left organizations with a burning question: How should we invest in IT?
To help you spend your money wisely, here’s a list of essential tips to help you manage your IT expenses.
1. Clearly lay out your IT goals
You might wonder about the connection between your organization’s goals and your IT budget. However, your vision and goals for your organization form the foundation upon which your IT budget should be planned.
When there’s no clear vision, you leave more room for your budget to wander. This can lead to unnecessary spending that you might regret later. Therefore, draft a vision statement and adhere to it.
Keep in mind: Having a clear vision while planning your budget is a good practice across organizational spending as a whole and is not specific to IT.
2. Assess current and past expenditure
We all make money mistakes. To avoid repeating these errors in the future, take the time to understand where you’ve gone wrong in the past.
Audit and review your current and past IT spending. Create a list of essentials and eliminate unnecessary or less important expenditures. Depending on your business type, identify what is crucial for your operations. What may be significant for another business model might not hold the same importance for yours, so avoid blindly following notes from other companies. Gain a thorough understanding of your business model and make financial decisions that will truly benefit your organization.
3. Allocate a budget for non-negotiable IT requirements
It wouldn’t be fair (or smart) to invest in emerging technologies while overlooking critical IT components. Some of the essential requirements for IT include hardware, maintenance, software, and IT staff.
The absence of a proper IT infrastructure could result in security breaches, leading to hefty fines that could significantly impact your IT budget or even your overall budget, as data breach fines are anything but trivial. It’s advisable to plan your IT infrastructure in a way that shields you from the repercussions of data breaches, preventing additional expenditures.
Furthermore, integrating technology into your daily business processes has the potential to boost employee productivity and enhance customer experiences. Therefore, it is crucial to prioritize the essentials and allocate a sufficient budget to ensure the seamless operation of your everyday IT functions.
4. Review the budget regularly
Budget allocation is not a one-time event; it requires periodic planning and review.
If you assume that you can plan your finances once a year and wash your hands of it, you’re mistaken. Doing so will only drive up costs and consume resources in the long run. Therefore, it is imperative to regularly review and adjust your budget, ensuring that unproductive projects or processes do not deplete your resources.
Revisit and adjust your budget every three months so that you are not caught off guard by any surge in costs resulting from new technological trends or unexpected but necessary requirements.
The bottom line
The process of allocating a budget can be tedious and time-consuming, but with the right steps, you can master it. Start by setting clear goals, assess your past expenditures, allocate a budget for critical IT components, and periodically review your finances. Following these steps will not only help you save costs but also enable you to achieve your goals within your budget.
