3 Key Questions to Ask When Building Your IT Budget

As we enter the New Year, it is time to start asking key questions about your company’s budget. One major portion of your company’s budget should be dedicated to technology, as any successful business prioritizes superior technology. As technological adaptation and functionality are crucial for your financial success, it’s essential to thoughtfully establish your IT budget.

IT budgeting is the process of allocating funding to various IT programs, which can range from recurring expenses, like leases and staffing, to a major project or initiative. For some companies, IT budgeting is an annual initiative, but it can also be assessed as needed when each initiative arises. Budgeting for IT requires you to identify the technological initiatives that are critical to your company. Below there are some key considerations when building your budget.

IT MATURITY
Consider the level of IT maturity of your company, particularly determine if you're actively embracing new technologies to keep up with the competition or just settling with what is comfortable. Further, contemplate whether your company has a plan in place to advance your IT or if you adopt new technologies on an as-needed basis. Additionally, it’s essential to consider which aging assets are coming off depreciation schedules and whether that will have a positive impact on your budget formation. If they're coming off-book, consider whether these technologies will need to be replaced.

Depending on your organization’s IT maturity level, you may need to examine several options to help expedite and coordinate your budget. Companies that are substantially lagging in the tech adoption category should consider hiring a technology consultant or service. These consultant services can provide a range of guidance and recommendations to ensure your IT systems are fully managed. If you intend to plan for every cost, trust an expert to assist in identifying the most practical technology solutions with the best ROI. However, if your company isn’t suited for long-term planning, you can still map-out a more flexible plan, which allows for mid-year pivoting while still providing a map to help you achieve organizational goals.

COMPETITOR ANALYSIS
It’­s pertinent to consider how you’re positioned against your competitors. While it’s difficult to actively track your competition’s technological capabilities, it’s important to do so to the best of your ability. That way, you can position your organization in a way that’s unique, demonstrating the advantages of your business. Simply put, updated technology creates a streamlined user experience, leading to customer satisfaction.

EXPECTED GROWTH
Take time to estimate how much growth your company should expect in the upcoming year. If you expect a boost in sales, configure your plan to meet the inevitable expansion of your workforce. As you grow your team, technology systems become more complex, so it's essential to prepare for these increased needs from a technological standpoint. Consider everything from the basics, like permission-setting, to more complex feats like data collection and analysis. Incorporate this expected growth into your IT budget, as technology shouldn't be the reason you can’t properly scale your business.

RISK MANAGEMENT
Examine the current state of systems and assess your readiness for technological failure. Do you have a solidified plan in place, or do you plan to cross that bridge when you get there? Ask yourself what kind of lost time or lost revenue would you experience if an outage occurred.

It’s critical for businesses to take technology into account and plan for the inherent risks. First, make a list of all the technological assets your business owns. From there, determine which features are most important and which are relied on daily. Then, assign team members to those essential technologies. This will allow you to examine the proper funding that should be devoted to the protection of those. As business becomes more dependent on technology for success, it’s essential to consistently leave room in your budget for updates and advancements.