With inflation rising across the globe, supply chain worries lingering and a labor shortage persisting, small businesses are faced with the increased challenge of keeping their 2022 IT budgets and creating a pragmatic 2023 budget that takes all these headwinds into consideration, yet does not compromise the necessary technology benefits, such as security, communication & collaboration. With Q4 about 45 days away, the pressure is mounting.
IT budgeting can range from an opaque and painful annual process to the actualization of a carefully crafted IT strategy and roadmap. For too many small businesses a separate IT budget doesn’t exist; necessary technology expenditures are carried over from year-to-year with IT kept as a single line item. When adjustments are needed, arbitrary cuts are the tool.
Small Businesses That Have a Trusted IT Partner Have an Advantage
When a small business partners with their IT Managed Service Provider (MSP) to create a multi-year technology roadmap, the guesswork is removed from the budget process. A technology roadmap allows small businesses to clearly understand not only the current projects and delivery of benefit they can expect from IT, but the cycle of expenditure as well as the category of essential, recommended and discretionary. Creating an IT roadmap is a straightforward process that leaves the heavy lifting to the IT MSP, but involves the business, key vendors and stakeholders. An IT roadmap is the first step in creating an effective IT budget.
While the IT roadmap will vary and is unique to each business, they all share common elements:
With an IT roadmap in place, along with an IT Steering Committee, creating a useful IT budget becomes a much easier and straightforward task, as well as a useful tool for the business. As with any type of budget, in some years a business may not make many changes to the IT budget. During other years, however, a business may need to drastically increase or decrease the amount of money it spends on IT. To make these decisions in an informed and useful manner, create a budget using these guidelines.
Partner With IT
A budget is a business tool for planning, implementing, and controlling activities for the best use of limited resources. It explains the company’s goals and the course of action it will choose to achieve its goals in detail. Creating an IT budget requires in-depth knowledge of the IT systems, the IT inventory and the benefit gained by the business of the IT solutions in place.
IT commands the necessary knowledge to advise and drive the IT budget process, which must always align with the business goals.
Review Last Year's Budget
If an IT budget exists from last year, it’s a good place to start and figure out if changes are needed. If money was spent on new equipment, such as desktop computers, last year, then there is probably no need to buy those items again. Review of last year’s budget is also helpful to easily find recurring expenses.
Review Recurring Expenses Certain IT costs won’t change much from year to year. Some common recurring IT expenses include:
Cloud storage space
Renewing software licenses
Spam Filtering and Anitvirus software
Employee training for cybersecurity awareness
Once the recurring IT expenses are found, the ability to spot redundancy, usefulness and gaps becomes clearer.
Review IT Inventory
IT keeps an up-to-date inventory of all IT equipment, including their age, warranty information and vendor. Review of the inventory during budget season helps to highlight the necessary “cycles” that factor into an IT budget.
Talk To Your Employees And Managers
Employees are a great resource to identify what’s working well and where the pain points are. After all, they’re the people who use the IT equipment and applications daily. IT supports the staff all year long, but during budget season the conversation shifts from support to a dialog about wish list items, pain points, fresh solutions and business plans.
When the same requests are heard from a lot of people, it’s a consideration for the new budget, but all budget items should prove a good return on the business investment.
Plan For The Future A comprehensive IT budget will always include a line for research and development that will allow for improvement and testing of innovative technologies that can help a business stay competitive in the industry.
Navigating inflation, supply chain disruptions, the continuing pandemic, and the possibility of recession will put significant pressure on small businesses and force many to reevaluate their priorities. While this is not a new calculus for small businesses, experts agree that IT is still a cornerstone of any business, regardless of the industry and cybersecurity is an essential part. Creating an IT roadmap and corresponding budget will empower any small business to remain agile and adapt to shifting priorities without compromising the security, competitiveness and efficiency of the business.