Planning a budget in IT is a stressful task for most managers, since it is necessary to balance the pressure between the costs reduction in some departments and save some money to invest in others.
How much should you spend in maintenances and updates? Which technologies must you invest in, in order to enhance your business? Answering these and other questions will be essential to set a more precise budget and to guide the resources to where they are really necessary.
This post will guide you, IT manager, to build a budget in a strategic way and to make it easier to make decisions in short, medium, and long time. So, check how to set a budget in IT efficiently below!
1.Evaluate the Key Performance Indicators
All departments of the company regardless the acting sector must count on KPI’s (Key Performance Indicators). KPI’s are essential indicators used to evaluate the efficiency of businesses, both operational and strategic.
At IT, you can use these specific indicators to measure the financial performance and to evaluate the cost-benefit relation of the infrastructure and resources used. See below some tips of what to measure:
- Return obtained until the present moment with new applications;
- Generated costs (compare with the general market to obtain an ideal of which would be the ideal costs average);
- Income and expenses generated with all infrastructure (you must set the period that fits you better);
- Necessity of investments in technology and other resources;
- Relation between investment and return from marketing and publicity campaigns;
- Virtualization rates and necessary use licenses;
- Income generated by user and the service used;
These are just some ideas. Every company has its own needs and can develop a more appropriate indicator.
2. Do Benchmarking (Market study)
Do a good market research often in order to find out opportunities that may come, as well as the risks that could threaten the future of your business. For that, use the SWOT (Strengths, weaknesses, opportunities, threats) matrix.
This is a good way to discover what the level of competitiveness of the company is, so you can set priorities right, and well locate and cut wastes.
With all this information in hands, compare the costs and operational wastes in IT with those from other size-alike organizations. If the difference is way too big, there must be a task to find the secret and bring forth solutions that can allow the company to make more from less.
3. Analyze the necessity for personnel
Personnel is essential so you can ensure a good department work. So, check if you have the right professionals. They own the abilities, experiences, and knowledge necessary to attend the necessities of their position?
Assess this by identifying the requirements necessary for each job and compare the information with the professional background, and specialization of the collaborator. Reallocating may be necessary. It will be demanded a certain investment, but the return can compensate it a lot, and quickly.
You should also evaluate the necessity for hiring. Use the same technique of comparing the needs from the position with the preparation of the candidate and hire more appropriate professionals.
This stage is crucial to set a budget in IT because it will show you how much you must invest in order to reach the improvements in productivity and profitability in a short period of time.
4. Do more personnel training
Hiring the correct people and reallocating professionals to a more appropriate position where his efficiency can be improved is highly important, but that is not all. Practical and theoretical trainings are necessary to promote a continuous development of the competences and to update professionals regarding the innovations in the market.
Training can be cheaper and more interesting than hiring new professionals and, as a consequence, it will promote improvement in results, and increase the professionalism at the company. This strategy also contributes to reduce the turnover index, because of the appreciation felt by collaborators.
All this helps the company to have a shrunk income in the future, with less losses and more profitability.
5. Take into consideration the physical area
Companies still possessing the Local Data Center infrastructure must consider the necessity for more physical space, once the growth of the organization will demand more equipment such as servers, and other hardware devices.
Even if the company has transferred the IT infrastructure to cloud computing, some locations such as offices may need more space as the business grows.
So, do not forget to evaluate the costs, return, and demand for physical space while elaborating the budget planning in IT at the company.
6. Use the necessary technologies
Besides the physical space, the company must also consider updating the equipment. Outdated hardware and software can cause a negative impact in the results, and make the business lose its competitive force.
The Key Performance Indicators and market studies show existent technology that can bring more ideal solutions. Add them to your IT budget.
7. Be attentive to cloud computing infrastructure
If the company has a Local Data Center, sooner or later it will be migrated to a cloud computing infrastructure. This happens as Internet technologies grow, and the advantages and benefits of this strategy become bigger and more attractive.
If you are already a cloud computing user, you know that the scalability is important to ensure a more sustainable development which must include the need for investments in new resources, tools, etc. A cloud computing-based infrastructure can be way cheaper and bring more satisfactory results. So, consider this methodology in your IT budget.
8. Consider the use of outsourcing
Outsourcing has never been more in focus before. After the cloud computing hosting solutions, outsourcing functions is a ever-growing tendency. The strategy enables the company to transfer the operations to the care of competent professionals, getting better results with lower investments then.
Planning, implementing, monitoring, controlling, and correcting can be done in a more efficient way and in real time, adding agility and minimizing the risks. Include this strategy to your IT budget and you will see how the investment will be worth it in a short time. And remember, outsourcing can be done for development and testing phases, too.
These are some of the main factors to be taken into consideration while elaborating an IT budget. However, as we said, every company has its own needs. If you remember about something else, you must include it to the planning to make it more complete and precise.
Certainly, do not forget that all this must always be lined up with all other departments of the company, because it is important to remember that the integration between IT and other areas is the key success factor of the whole organization.
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