The twists and turns of this year indicate just how critical it is to strategically plan your budget for 2021. Budgets keep your business on the right track, and are a good plan to fall back on, even when things are as hectic and unpredictable as they have been recently.
A budget isn’t just about making sure you break even, or even about making a profit. Budgets provide trajectory and data to help your business evaluate its growth.
With a tool as fundamental as technology, it’s important to prepare an accurate budget that will help your business grow. Here are a few principles that can guide you in making those important IT budgeting decisions.
Review Last Year’s Budget
Past budgets give data to understand your expenses, margin, and revenues in detail. These facts and figures to help you determine what went wrong and what went right last year, so you can make adjustments for the next year.
Ask yourself the following questions to improve your budget:
- Were there spikes in costs?
- What was the cause?
- How can it be avoided next year?
While recognizing what went wrong is critical to avoiding the same budget mistakes later on, recognizing what went right is important too! You can replicate these successes in future budgets.
Know Your Recurring Expenses
There are some expenses that can be avoided and others that can’t. Look at the recurring expenses, and you can safely assume that those costs will be included in your budget for 2021.
The following are often recurring IT budget expenses:
- Cloud Storage
- Software Licenses
- Managed IT Provider
- Internet Services
- VoIP/Phone Services
- Data Backup Services
Take Stock of Your Inventory
Make a detailed list of everything that you have in your current IT inventory, along with when you bought it, its condition, and its cost.
You will then need to decide if you intend to replace any of them, as anything that you will be replacing will need to be considered in your budget.
There are some standards for how long IT hardware items will last before needing to be replaced in order to function properly:
- Many computers can last up to five years.
- WiFi routers should be replaced every four or five years.
- Servers need to be replaced every few years; consider transitioning server infrastructure to the cloud, a more cost-effective and scalable solution.
- Mobile devices should be replaced every two or three years.
If applicable, keep an inventory of warranties for each piece of hardware you acquire, note when they expire, and decide if you will require extended manufacturer support. Warranty extension expenses can be easily overlooked when creating a budget, but they can be life savers when there are unexpected and expensive hardware failures. .
It is also a smart idea to plan for one or two breakages in the annual budget.
Ask the Team for Feedback
Getting feedback from your team about what IT services are needed can be the best way to understand what is necessary. Buying extra services or packages that you don’t need will eat into your budget and give you very little value returned.
Your team might emphasize a greater need for services than hardware (or vice versa). As these are the people utilizing these assets on a day-to-day basis, talking to your team will give you a clear idea of what is required and what you need to budget for.
Differentiate Between Needs and Wants
Your team might want a brand new MacBook and the matching iPhone, but do they need it? Probably not.
In most cases, you can equip your business and your team with what they need in terms of hardware and software more cost-effectively than just buying the latest and greatest technology. However, be sure not to be cheap where it counts.
Consider the Future
You should consider all budgets with a long-term perspective of your company’s trajectory. Give serious thought to making transitions that will allow your business to be more mobile, productive, secure, resilient, and cost effective. Examples include, but are not limited to, the following:
- Data migration to the cloud
- Implementation of productivity and collaboration tools such as Microsoft 365 business
- Implementation of cybersecurity and data protection tools
- Investing in business continuity and disaster recovery tools and planning
Company growth in any industry will require alignment of your IT and company goals. IT is essential to keep your company digitally safe and secure. A sound IT budget protects your business long-term.
IT Strategy Consulting
If you’re at a loss with your IT budget and strategic planning, we can help!
At Envision Consulting, we have over 20 years of experience in the IT industry. We understand the important principles of business management, and we want to help your business use technology as an effective tool for growth. Contact us today for more information about our managed it solutions.