Since a major part of budgeting and financial planning in any organization falls on the shoulders of the IT department, preparing a budget will help you and other departments track your expenditure accurately and efficiently. Technology budgeting is crucial because all major organizations rely on IT services. Before we go into the details of technology budgeting, let’s first understand what the term ‘technology budgeting’ means. Information technology or IT budgeting refers to the total amount of money that a company spends on IT services. The budget includes the fees paid to IT consultants who install relevant systems and those responsible for maintaining them. The CIO or Chief Information Officer is responsible for creating and overseeing the technology budget in every cycle.
Since budgeting for technology can be complicated, you must calculate and evaluate your budgeting plan for the next cycle. This is mainly because the costs related to IT are not all handled by the IT department; a part of it is overseen by other divisions in the organization. On that note, follow these steps to know how to evaluate your technology budgeting.
1. Go through your Current Expenditure
To calculate your IT expenses for the next year, you must know the exact amount that you are currently spending and have spent in the past. It is necessary to come up with a definite figure to refer to a clear picture in the end. Consider every aspect related to IT and its services, which include software fees, computers, apps, servers, maintenance, cloud-based services, web hosting, consulting, audiovisual equipment, and telecommunications. Do not forget to add the salaries and incentives paid to the IT staff. Every minor aspect should be considered to come up with an exact figure. Repeat the process with the last two years and mark the difference.
2. Set Goals, Objectives, and Standards for your Budget
The budget must be crafted from an overall perspective instead of being focused on one department’s needs. While duplicative purchases can be avoided with this step, the needed IT products and services in your organization will follow a centralized budgeting approach. As mentioned, it will portray the organization as a united entity that thrives in a symbiotic environment. Furthermore, the IT department of your company should guide others by suggesting and crafting objectives related to IT services. Make sure that the budget is envisioned for a long-range perspective instead of a daily inclusion. If your plan includes the purchase of certain tools and equipment related to IT services, learn more about this expenditure from employees in the IT department.
3. Run: Operation and Maintenance
This step includes and perceives expenditures related to daily IT operations, such as system infrastructure, workstations for employees, and tools for cyber-security. As you can see, the expenses calculated in this phase will not affect the company’s main goals and profits in a direct way. However, these are necessary to enhance employee satisfaction and boost productivity. If the employees are happy and willing to work long hours because they have all the facilities they need, it will improve the company’s performance in the long run. Some of these inclusions are hardware re-imaging, application management, IT financial management, and software compliance.
4. Grow: Enhancing and Expanding
As the name suggests, this step aims at enhancing productivity and promoting growth across the departments. The main focus is to improve internal systems. New capabilities are encouraged and older ones are polished. The items in this module, which also adhere to the company’s strategic initiatives include a new firewall for enhanced privacy and installation of a new software program. These initiatives are flexible with time.
5. Transform: Innovation and Drive
The initiatives in this phase are mainly related to research that promotes growth and development within the company. However, the objectives of this module can be a bit difficult to implement. If your company is running low on finances, several initiatives can be eradicated.
Some of these include workflow digitization, research and development, data collection and analysis, and IT solutions. If you are unsure of the process, you can seek help from proficient budgeting apps. Most of these ask for SMS authentication, which protects your personal information and data. Once your budget is ready, go through it several times to spot and eliminate possible errors.
6. Revise the Plan
Take help from a professional in the IT department and revise the plan. The Run-Grow-Transform model is popularly known as the RGT model and is considered by most companies to evaluate their technology budget.
These steps will ensure the success of your next technology budgeting cycle and help you meet your business needs. If you fail to evaluate your IT budget, you may encounter unexpected losses or accidentally overlook some issues that need your attention. All in all, evaluating your technology budget will help you ensure the company’s success.
