I.T. Budgeting: The Basics
In the famous words of a former Secretary of Defense, there are plenty of “unknown unknowns” lurking in corporate I.T. budgets. The dizzying variety of factors which go into I.T. spending present a tangled web for the largest corporations and startups alike. Where to start?
The primary question is one of scale. How big is your company now? How big is it going to get? How long will it take that growth to happen? Of course, no CIO in the world knows the answer to any of these questions for sure. What they probably doknow is the scale of a company’s ambitions. A company aiming to quadruple its business in the course of a year has very different needs than one whose growth path is likely to be more incremental.
While the ambition of a company will ultimately be the determining factor in how many computers and software licenses it buys, the infrastructure behind those user-facing elements of I.T. spending is just as important to pay attention to. The ability to scale is ultimately determined by a system’s core flexibility to absorb the activity and needs of a growing organization.
Under-investment and over-investment in network infrastructure are equally damaging, just in different ways. Invest too little, and a rapidly scaling organization will soon hit a ceiling which negates all of the savings from the lower up-front system costs. Invest too much, and the I.T. manager has capacity that is underutilized, making the higher up-front system costs appear unnecessary and wasteful.
Tracking utilization is another key factor in I.T. budgeting. Past performance is the best data that most managers have – it can establish a solid baseline for growth. Establishing “triggers” or ranges of expected growth can be another way to handle I.T. budgeting on the fly. If regularly measured usage data indicates that the I.T. budget is taking an unexpected path, the situation can be assessed and strategies can be adjusted accordingly. Regular status reports are the key to staying on top of the situation, and they can be quantitative (network traffic) or qualitative (help desk inquiries).
It can be tempting to pay too much attention to the equipment and neglect the human factor in I.T. spending. Yet training is a critical part of any technology budget. Training helps to ensure network security, keeps staff current on relevant technologies, and reduces the long-term burden on I.T. staff to assist with problems. Training is not just a form of insurance – it is also a maintenance cost.
Maintenance itself is another oft-neglected piece of I.T. budgeting. With Moore’s Law ever present in the world of technology, the assumption is that systems will usually need to be replaced rather than maintained. Yet the life cycles of systems vary considerably, and can’t always be tied to a coordinated upgrade. Keeping an old system running often saves not only the up-front cost of acquiring new technology, but also the cost of retraining employees and integrating new systems into the company’s workflow.
The unpredictability of I.T. budgets can lead to poor decisions which impact a company’s bottom line. The only real hedge against wandering down these errant paths is investing in a trusted partner to guide a company through the process and execution of an I.T. budget. Experts who have been there before are in a position to anticipate and deal with budgetary constraints before they happen.
Fretting about your I.T. budget? We can help.