Does Your New Orleans Business Need an IT Budget?
Without a budget, IT cost overruns can eat away at your profit and leave you with no reserves for needed upgrades and equipment. Therefore, most companies prepare an annual budget, also called a plan. A budget allocates money to each IT service used by your business. Some expenses, such as Managed IT Services, are fixed monthly costs. Other costs, such as new hardware or software implementation may be less frequent and more unpredictable.
It’s definitely worthwhile to prepare a budget for your New Orleans business. IT budgets are often considered one pool of money. That way, if priorities change, money can be reallocated. IT spend includes operating, capital and project categories, as well as software, hardware, subscriptions and services.
Let’s look at how to get started.
What’s Do I Need to Include in My Budget?
Create categories with logical ties to how your business operates. Here are some basic example:
- IT Service & Support: This includes in-house and outsourced resources. Include recruiting, salary and benefits, where applicable.
- Hardware: servers, computers, tablets, smartphones, laptops and network infrastructure, such as cabling, IP phones, and contracts.
- Software: support, maintenance contracts, licenses and subscriptions.
- Projects: IT consulting expenses, new hardware and software implementation, cybersecurity training and upgrades.
For a small to midsize business with different departments, you can allocate your IT budget to different departments that use the resources. Charging back costs to each department is difficult on two levels. First, the allocation percentage is hard to determine accurately. Second, department heads will always have objections to chargebacks that they have no control over.
What Are Best Practices in IT Budgeting?
The following best practices help you budget IT costs effectively:
- Align your IT budget to your organizational structure. This may mean creating line items for legal, HR, finance and other departments.
- Consider the human element. Consider how convenient or inconvenient changes to your infrastructure will be to the impacted employees. If you decide to decommission a tool needed by the finance team to produce reports, for example, it could result in employee turnover, inaccurate reporting and other adverse effects that outweigh the savings.
- Assess your IT budget’s on these areas: key performance indicators (KPIs) and cash flow and income statement comparisons (budget versus actuals).
- Consider the long-term outlook. Start a few months before your budget is due and review the prior year budget to the current year’s expenses. This helps you reallocate costs appropriately.
Your budget should be a living document. The main plan is the one originally approved at the beginning of the year. However, creating quarterly forecasts lets you stay up to date on new costs that arise.
Using a strategic approach turns your budget into an effective planning tool. Predictable expenses help you smooth out costs per month and avoid unexpected overruns.
Hiring an IT managed service provider for a flat monthly fee simplifies the budgeting costs and often saves you money in the long run. Contact BIOS Technologies today to learn more about our pricing structure and services.