How to Correctly Manage An IT Budget

How to Correctly Manage An IT Budget

Everyone likes money, but most of us hate hearing the dreaded word for managing money: budgeting. Sure, it’s easy to view a budget as a cage. But instead, what if you thought of your IT budget as a tool that worked for you, not against you? In this article, we’ll discuss how managing an IT budget can help you reach your goals and benefit your department, not to mention your whole company!

Budgeting Best Practices

1. Use your budget to accomplish your goals.

Think of your IT budget as a strategic tool. What goals are you hoping to accomplish this year, and how can your budget help you?

If you request more of the budget than you were given last year, what do you plan to do with the money? Is your request justified, or are you just guessing how much money you think would be nice to have?

When you set specific goals, it’s easier to see whether your budget is working for you to help you accomplish those goals.

For example, let’s say one of your goals for this year is to gain 30 new clients. Perhaps some of your budget will go towards a new marketing strategy geared towards gaining these clients. Or maybe you’ll want to invest in better analytics to see where most of your new clients are coming from.

Setting goals as a department and company will give you a framework for establishing and managing an IT budget. That way, you’re using the budget as a tool, and not a guessing game.

2. Manage an IT budget like it’s your own money.

When you’re the head of a department, it can be easy to expect money for every little thing your team might need. But every company has to manage their funds wisely and invest on the most important items.

Manage your budget like it’s your own money. When you bring home a paycheck, hopefully you spend it on your top priorities first, like your home, food, transportation, and other basic necessities.

Within an IT department, there are also a variety of needs. It’s up to you and your team to decide what is most important when it comes to allocating your budget. Managing your money wisely will more greatly benefit your team and the company as a whole.

3. Be transparent with your team.

You might be tempted to be secretive about your budget, but it’s still important to give your team as much information as you can.

Keeping everyone on the same page will help you manage the expectations of your team members. It will also save you time, since you won’t be constantly answering requests for new training or software.

In addition, transparency builds trust. When your team members can see that you’re using the budget to benefit them as individuals and the department as a whole, they’ll more greatly appreciate your efforts.

Prioritize items within your budget. If you were only approved for a percentage of the budget you asked for, what would you cut?

Creating An IT Budget

1. Set the baseline.

Review your current IT budget carefully, and try to understand how it was developed? What guidelines were used to prioritize spending, and how can you draw on these same guidelines when developing a new budget?

2. Prioritize items within your budget.

As you revise your current budget, consider the goals and priorities of your department. If you were only approved for a percentage of the budget you asked for, what would you cut?

Prioritizing your budget will also come in handy if you are asked to scale back at a future date.

3. Get ideas from your team.

The IT budget will affect your whole team, so make sure you’re all on the same page. Discuss the needs of each team member:
  • What did they spend money on in the past year?
  • Will they need to purchase new software, hardware, or training in the upcoming year?
  • What are their goals and priorities? What do they need most, and what could they get along without?

4. Communicate with company leadership.

Company executives have likely already developed a budget for the year, so asking them for feedback is a good idea.

Find out if they have any guidelines for the IT department budget. For example, they might ask you to stay within a certain percentage of last year’s budget, making it easier for you to estimate how much money your department will receive.

Ways to Save Money in Your IT Department

1. Share the wealth between teams.

Do you ever end up with some money left over at the end of the fiscal year? If you’ve used your budget to fulfill the needs of your department and you still have some budget left, be a team player and see how you can benefit other teams in your organization. Ask your manager how your IT budget fits into the overall vision, and consider scaling down to leave room for another team to grow.

2. Consolidate databases and applications.

Save money by consolidating any unnecessary apps and databases. Scaling back your infrastructure is a straightforward way to cut costs and free up funds for other areas within your IT budget.

3. Get creative with financing options.

If you notice a need in the organization that doesn’t fit within the budget, find creative ways to problem solve. Could your company use another employee? Consider taking on an intern. Do you need to make an important purchase? Reach out to your vendors about financing options. Or see if you can order a demo, making it easier to purchase the product when your budget opens up.

4. Consider fixed costs vs. variable costs.

Recurring fixed costs, like capital expenses, are expensive and inflexible. When it comes to budgeting for services, managed services on a month-by-month basis might be a better option than contracting for a year of services. As-a-service options give you greater flexibility and scalability, and they often save you more money in the long run.

How to Correctly Manage Your IT Budget

Long-Term Ideas

1. Review your budget monthly.

The best way to perfect your budget is to review it regularly and adjust as needed.

Where did you overspend and underspend in the last month? Did any needs or emergencies arise that you hadn’t anticipated? How can you use these results to improve your budget for next year?

Regularly reviewing your budget will help you to notice trends and evaluate whether your budget is helping you to achieve your goals. For example, overspending on department lunches means that you probably won’t be able to hire that new employee your team desperately needs.

Use these monthly evaluations to adjust as necessary, and you will have a lot easier time managing your budget in the future.

2. Communicate with both your team and your supervisor.

Throughout the budgeting process, communicate regularly with your team and company leadership. It might take a few months to get the kinks ironed out, so it’s important to ask for help and work together.

Are you consistently overspending in a certain area? Or maybe you aren’t sure where the money is going every month. Discuss this with your team, and brainstorm solutions for cutting costs or adjusting the budget.

In addition, it’s important to share your success stories and best practices. It will boost morale and show your supervisor how you’re using your budget effectively.

We Can Help You Manage an IT Budget

As you get better at managing an IT budget, you’ll start to see your money working for you instead of against you. Your budget will not only help your team to be more effective and profitable; it will also show other company leaders how the IT department can benefit the company as a whole.

Here at CR-T, we take pride in providing enterprise-level IT services at prices that work for small businesses. Our team of experts can become your IT support department, responding to issues quickly, often before you even know about them. Covering everything from your servers and network infrastructure to your computers, workstations and mobile devices, we provide end-to-end solutions for all your technology needs.

Time and experience have helped us develop best practices and workflow procedures designed to keep your focus on your business, not your technology.

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