IT Budgeting: How to Get It Right
During periods of economic uncertainty, business owners start to question the value of everything in their operating budgets, including their IT spend. Information technology costs cover a vast range of elements, including hardware, software, and staff, and they can vary enormously depending on the sector, the company size, and the status of the CIO in the company.
In this post, we provide useful tips on how to determine whether you are using your IT budget for maximum profit. We’ll look at IT budget planning, auditing your IT spend, and the advantages of using an expert managed service provider to optimize your IT spending per employee.
Are You Getting a Proper Return on Your IT Investment?
If you suspect that your IT expenses outweigh the results they are generating, consider where you are spending. If any of the following resonate with you, you may not be allocating your IT budget wisely:
- Relying on Outdated Technology:A surprising number of Fortune 500 business systems still rely on mainframe computers. This is because the data on these systems is so critical that the companies can’t risk the downtime required to transition to new technology. They camouflage the issue by installing the new tech on top of the old, but this limits its potential and can lead to performance issues due to integration difficulties.
- Overspending on Legacy Systems:IT teams tend to overspend on tech capacity to ensure an existing system will be adequate for future needs. They often install a crucial legacy application on systems that are far more powerful than necessary, but this not only adds to the IT bill, it also makes it more difficult to identify any problems that arise.
- Inadequate Data Compliance and Cyber Security Protections:Many companies are unprepared for a ransomware attack or other major cybersecurity event, despite substantial investment in IT staff and resources. This is because they are not targeting their spending correctly. Cyber security investments return few tangible benefits until, of course, an attack happens. And for the majority of businesses, a cyber security event is statistically inevitable.
- Chronic IT Problems:It’s impossible to separate IT infrastructure from the human team running it. If these people have to deal with constant interruptions and distractions in the form of recurring IT problems, they can’t focus on serving their stakeholder and supporting the business.
How much should a business spend on IT?
Determining an effective budget means asking the right questions. Here are some IT budget planning questions you need to ask your CIO:
- Is our current technology meeting our needs? Technology needs to keep pace with the growing complexity of your company.
- Are we equipped to meet our 3, 5, or 10-year plans? Technology should automate manual processes. When considering your company’s goals, ensure your IT is aligned with it.
- Are we underusing our current technology? Your CIO will know whether your existing IT is designed to meet your business needs and whether the relevant staff are trained to use it properly.
How to Audit IT Spend:
An IT budget audit is a good place to start if you want to determine whether you are getting a good return on your IT investment. Your CIO should provide you with a comprehensive report detailing your hardware devices and the software installed on your computers and servers. The report should also list the ages of your servers, computers, network equipment, and other devices. Once you know what you have, you will have a better idea of how to proceed with planning your IT budget to maximize your company’s profits.
Consider Contracting an IT Managed Services Provider (MSP)
If your internal IT department is not generating the results you need, a practical option is to hire an IT MSP to replace or augment it. This approach will improve your IT efficiency and save you money. Hiring in-house IT professionals will always cost more than outsourcing to an MSP. So if you already have a full-time IT person, then it’s probably more cost-effective to hire an MSP as a supplement vs. an entire in-house IT team.
And what if you don’t have a CIO? A good MSP such a COUPLE of GURUS will act as your fractional CIO/CTO to provide you the reports and details you need to optimize your IT budget and grow your company.
Interested? Let’s Schedule a 10-Minute Call to Discuss.
We’ll discuss your unique situation, any concerns you have and, of course, answer any questions you have about us. If you feel comfortable moving ahead, we’ll schedule a convenient time to conduct our Technology Roadmap Assessment.
A good MSP will quickly become thoroughly familiar with your infrastructure and processes and deliver the kind of responsiveness you expect from an internal team. With a COUPLE of GURUS, for example, you can be sure your IT budget is planned to suit your needs and spent effectively on technology that works.