How to plan your IT budget

Preparing your IT budget can be a daunting prospect for a number of reasons. Here we give you an idea of how to calculate your IT budget, so that you can manage it effectively.

Following two years of uncertainty globally, there have been many changes in both the way we live and the way we work. In an environment where hybrid working has shifted from the exception for a few to the norm for many, there are additional considerations that need to be made, including ensuring that your data is stored securely across multiple locations, ensuring collaboration and communication across your teams is maintained and centralised, and also ensuring that your customers are being serviced without any communication issues.

Further to that, an additional challenge comes around whether your company is growing, or adopting a more streamlined approach – new employees coming or going can have a positive or negative effect on your budget, depending on your hardware and software needs.

Align your budget to your company goals

The first consideration that you’ll need to make is the ‘what’. What do you want to achieve in the year ahead? Whatever size your business is, you will have goals for what you want to achieve. Whether you are looking to grow organically, or via mergers and acquisitions, you will need to ensure your budget aligns with the additional cost and scale of this. For example, a merger or acquisition will mean a number of new employees, who will need additional IT equipment and software licenses to ensure that the transition is as seamless as possible. All of these considerations will have costs associated with them, so it’s important to ensure that they are included within your budget.

Examine your previous year’s IT budget

2021 may be in the past, but with regards to your IT budget, it can include some useful information for your future. Budgets change from year to year for a reason. For example, there may be additional costs to consider for the year ahead, such as increased costs of software licences. But there also may be savings to be had. For example, you may have undertaken a large project in 2021 that required a significant additional amount of IT budget, but has now been completed.

This can either lead to a reduction in your IT budget, or depending on your plans, that amount can be assigned to another project. This will lead you to carrying out a needs analysis.

Needs analysis

A needs analysis will allow you to really understand where your budget needs to be spent. For example, have you adopted an in-office, remote or hybrid working solution for your staff? If this has changed in the past year, you will need to consider enhanced communication tools that allow your remote and in-office staff to collaborate and communicate with each other, and with your clients and customers.

This will all need to be underpinned with cyber security. Keeping your data safe whilst juggling in-house, hybrid or 100% remote workers is a challenge many businesses have faced over the years, and it is worth reviewing your cyber security to ensure that your sensitive data is secure.

Are you ready to embrace the cloud?

Once you have completed your needs analysis, you will be in a better position to assess your needs as a business. One key consideration will be which of your services can be shifted to the cloud, and how you will pay for it. Many of the core software services and infrastructure that businesses utilise on a day-to-day basis are now shifting to the cloud. This can represent both savings and flexibility from an expenditure standpoint.

This is where CapEx and OpEx come into play.

CapEx & OpEx

Capital Expenditure refers to the money that a company spends towards fixed assets. From an IT perspective, this can mean expenditure on computer equipment and on-site servers.  This can offer certain advantages, as whilst it may require a significant initial outlay, this is often a one-off purchase. The downside of this is that CapEx purchases generally provide less flexibility. For example, once you buy a server, if that server reaches capacity, or becomes obsolete, you will need to buy a new server. This is the same with laptops and other digital office equipment. Once a computer reaches the end of its life cycle, a new one will need to be purchased. Additionally, if you are scaling up or scaling down your business, you may end up with more or less inventory than you actually need.

Another consideration is maintenance. Purchased IT equipment will need to be maintained, which can lead to additional costs in both repairs, and if the situation cannot be remedied, replacement.

This is where Operational Expenditure (OpEx) comes into play. Operational expenditure refers to the funds that support your day-to-day businesses. This can include costs such as utility bills, printer cartridges, stationery, website hosting and web domain registration.

Many of these are supplied on a regular basis to companies via suppliers on a monthly or annual basis. The payments are made on an annual or monthly basis, and pricing plans are flexed according to the business’s needs. For example, if you are hosting six websites, and you choose to close one of them, you will no longer need to pay for that website, leading to a lower operational expenditure.

When it comes to IT budget, software (such as Microsoft 365 and Google Docs for Business) and infrastructure (Microsoft Azure, Amazon Web Services and Google Cloud) are now available mostly on a SaaS (Software as a Service) or IaaS (Infrastructure as a Service) basis.

This means that, rather than paying outright for a software license or server storage, you are paying a subscription for that service either monthly or annually.

This can provide many advantages. For example, if your business grows and you require more licenses for software, you can simply add more users to your Microsoft 365 subscription at any time. Additionally, if you need more server space, you can simply purchase the space you need from your IaaS supplier. This can also be applied in reverse. If an individual leaves your business, or you find that you require less server space than you initially thought, you can simply remove an individual license or reduce your capacity as and when you need it.

This can provide significant savings over the course of a year, and allows you to spread your payments, giving flexibility to allow your business to grow without the need to worry about significant up-front purchases. It also saves costs on maintenance, as the data centres and servers and maintained by the IaaS provider.

In addition to this, rather than relying on a fixed phone-line for your office, you can consider VoIP technology. Cloud telephony allows you to add users without the cost of an additional fixed line or handset.

You can even make savings on your hardware by choosing to lease your computers and other hardware.

So, a key consideration for your IT budget should be where your CapEx can be moved across to OpEx.

Training and development

Another key consideration will be for training and development. If you are investing in new technology and infrastructure, no matter how you choose to pay for it, you will need to consider training your staff on how to use the new equipment.

For example, if you are moving to a cloud operating system with remote desktops, staff will need to be trained on how to access the desktop, and how to save documents and data securely to your new server.

Assuming that your staff are all digital natives can lead to tools being misused, data being lost or being stored insecurely, and can leave you open to data breaches which can be exploited by cyber criminals.

In addition to this, when moving from fixed telephone lines to VoIP, staff will need to be trained in how to use the new systems, as it will be unfamiliar to them.

Roles and responsibilities

Consider assigning budget to individual departmental decision makers to decentralise areas of the budget and allow them greater control and flexibility. For example, if a new member of staff joins the sales team, ensure that the Head of Sales has control and is able to assign budget for all of the new equipment and training required for that member of the team.

Throughout this process, it’s important to involve other key decision makers within your business, as each of them may have separate and distinct needs from an IT perspective. For example, your sales team will be heavily reliant on Microsoft services such as Teams for meeting with clients and prospects, and will also need to be fully aware and bought into any VoIP services that you may choose to employ. They may also need additional training on features that are specific to them.

This will allow for greater autonomy for individual teams to spend IT budget on the areas they need.

Make sure you are backed up and secure

Finally, make sure that any investments that you make are fully backed up and secure. Protect all of the investments that you are making by investing in a backup and disaster recovery strategy. There are internal and external threats to your business, either through user error, cyber crime or service failures, so investing in a back-up and disaster recovery strategy which can be reviewed every year should also be a key consideration.

Data is the backbone of any business, and loss of data can be catastrophic. Over 60% of companies that suffer a serious data loss close within 6 months, which illustrates why backup and disaster recovery is so important.

We’ll work with you to put a backup and disaster recovery plan in place, so you don’t have to worry about events that threaten your business continuity. From power failures and hard disk crashes to fires and floods, we can help keep your data safe and keep you up and running with minimal disruption.

Whatever your budget, we’re here to help

We understand that transforming your business and making it fit for now and in the future can be a challenge. That’s why we are here to help you transform your business IT, working with you to provide a technology roadmap that we can help you implement at every step of the way.

We are dedicated to making the complex simple and have assisted many businesses and organisations in transforming and improving their IT infrastructure.

Contact us today for an audit of your business technology or jargon-free guidance. As tech experts and a Microsoft Gold Certified Partner, we can help you to work smarter, operate safer and think bigger.

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