10 Questions You Should Answer When Preparing Your 2020 IT Budget
It’s the most wonderful time of the year...the time to discuss your IT budget for 2020! If your fiscal year coincides with the calendar year, you're late. Better get started ASAP! If you have a little bit of time before budget finalization it's time to make decisions. Not everyone understands the importance of IT and the necessity of budgeting for upgrades in equipment, software, and expansion of services. An important part of planning the yearly IT budget is the presentation to the financial officers of the company as well as all employees that make purchasing & budgeting decisions. They need to understand that for the company to be in good financial standing, IT must also have its' budget requirements met.
What Are Your Competitors Spending?
Setting up an IT budget begins with a good hard look at the industry and your competitors. Compare their spending with your comparable expenses. Keep in mind your position in the industry. Small businesses will spend about 7% of their revenue on IT, whereas larger companies will spend about half of that amount (around 3.5%).
Every business is different, and different industries require diverse resources dependent on the expectations of their IT department. Anyone involved in the financial sector, health services or any other industry that deals with heavily protected personal information, should expect to spend more on technology & online security than other less regulated industries such as retail.
Coordinate Your IT Budget With Company Goals
Your IT department's goals should align with the rest of your business’s goals, and your IT budget needs to support that. In order to do this, a combined approach should be made to fully understand the company’s goals for the future. If there are new goals that you are trying to achieve for the new year, those are factors that need to be addressed in the upcoming budget discussions.
Here are 10 questions you should answer when preparing your 2020 IT budget:
- Is your company hardware meeting industry standards?
- Will it be sufficient for the upcoming year?
- Is your software up to date?
- When do your licenses expire?
- Does your company plan on hiring?
- Will you need additional work stations in the next year?
- Do you want to set up employees to work from home?
- Does your phone system need an upgrade?
- Are salary increases due?
- Do you need new mobile solutions?
Make Time For “Budget Time.”
Trying to cobble together a quick budget results in either rejection by senior management and a “do-over” or worse, under budgeting for the IT department. The key is to keep tracking expenditures all year long with an eye towards where expansion is needed and where efficiencies can be realized. When a need is identified, don’t wait until the end of the fiscal year to make note of it. Develop and update a running wish list so you don’t forget anything.
Involve Your Team In Budgeting Decisions
Hold a meeting specifically about budget items and priorities for the upcoming year. Or ask your team to send you their wish list items.
Understanding the needs of your team is essential in putting together a budget that will keep your business running efficiently while using every dollar wisely.
Keep Talking After You’ve Turned In Your Budget
Checking in with staff that make purchasing decisions regularly will help ensure you’re not overspending on one project or under budgeting another. This check-in could be as simple as sending an email, or it could be as involved as a sit-down formal meeting. At the very least, make sure all of your employees have an opportunity to let you know when they need something, so you can have a clearer picture of what your yearly budget should look like.
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