It’s the time of the year again when many businesses start to fumble to re-evaluate and forecast their annual budget for the coming year. Times are different now whereby every penny we spend we have to be accountable for due to the uncertain pandemic situation over the past two years. Thus, getting a proper annual budgeting outline for your operations is definitely crucial for all businesses no matter how big or small your business is. 

Having a budget profile gives you a better idea of your expenses, assets, liabilities, and of course, how much money will you be needing in the future (ie. in months/years) This will help you in making more informed decisions and prioritize certain projects or activities that you may have in plan.

There are different budgeting categories that most businesses will likely look into, master budget (Projects/new business plans), operational expenses, manpower expenses. 

However, sadly, many companies often forget the importance of setting aside expenses for their IT. Many asked, why is it necessary to do so, don’t we just need to budget out an amount for equipment purchases that’s it? You are NOT exactly right. 

So here we are, to share a bit more on why it is essential to map out an IT budget/expenses for your business. 

 

Why is it essential to plan an IT Budget?


To determine the budget for your IT department is largely different from pre-covid days. The traditional concept of applying a percentage of your revenue allocated into IT expenditure will be detrimental to your business and competitiveness edge. We now see an unprecedented expenditure in businesses to adopt technology regardless of industries. Who would have thought that with the sudden implementation, all of us have to scrabble through, and transit to work from home? With that, funds will come in handy for extra expenses like these to facilitate staff working remotely. 

Creating a budget for your IT environment will eventually help you to foresee and manage your IT assets properly, resulting in better productivity and efficiency in your operations workflow. 

Not sure how to go about planning a basic IT budget for your organization? Fret not, we are here to simplify and work out something quick for you. 

1. Research

First, try to understand a little more about your IT environment. Is your organization solely handling IT on your own? Or do you have an outsourced vendor handling your infrastructure? This is crucial as this helps you to identify the areas you’ll need to look into, or who to look for for your IT-related queries! 

 

2. Reviewing your purchases

After which, you may approach your in-house IT department or vendor to review your purchases the previous year. We have listed some items that you could start off with: 

Categories Includes: 

  • Hardware
  • Software
  • Licenses
  • Application subscription plans (if you may have)
  • Other peripherals/equipment 

 

Sub Categories Includes:

  • IT managed services (eg. IT support vendor, telephony support, printer support, specific equipment support, cabling support & more) 

 

Do also check out and layout all the subscriptions and licensing prices by their frequency: is it one-time, annual, monthly, or credit-based. Should there be a budget outline last year, how did it go? Was it over or under budget?

 

3. Brief Inventory Check & Asset Management 

With the idea of the previous purchases, it will be also good that you could review the items individually, for example, the date of purchase, warranty/software status, and licensing. This will help you to foresee how much you will need to set aside a budget to renew or upgrade them*. On the other hand, your employees will be able to benefit from the necessary upgrades to enhance their productivity

 

It will certainly be a bonus if your management has an idea of what plans/goals they might have in the next few years so allocating a certain budget for more bulk purchases and maintenance service costs can be in the books as well! 

 

* DO NOTE: Every machine/equipment pieces are different, it depends on the frequency of use on a daily basis, environment, and internal software & hardware limitations. Verifying it with your IT vendor/department will help you to have a better gauge on the replacement process. 

 

4. Business Continuity Plans (BCP) & Other Emergency Funds 

You might not know when your company gets hit with a ransomware attack, a major equipment breakdown or the business might decide to transit to work from home for a long period of time due to the uncertain situation out there. Setting aside an IT emergency fund can help to tie over a short period of time if need be. It will always be a good habit to have some money in your pocket so you can activate it during rainy days! 

 

5. Drafting your IT Budget 

With the above findings and plans, you can start to draft out what is required, or to-do away for the coming year. It need not be an exact figure but having some buffer in-between helps. If it gets complicated, try breaking it down to different quarters of the year, this will help to see what’s in your priority list (ie. what to purchase first, what to upgrade, what to terminate) Note down along the way when payments are made so you can reference it for budgeting the following year. 

An example would be:

Type 1: Variable Expenses

  • Logistics
  • Support
  • General & Administrative
  • Hardwares
  • Applications
  • Furnitures
  • Subscriptions

Type 2: Fixed Expenses

  • Warranties
  • Insurance
  • Manpower 

In Summary

Every business is different and there is a ‘no size fits all solution’. Keeping in mind that IT is an integral piece to help tackle the organisation’s goals and objectives. Many businesses invest much time and effort and draw out a realistic budget roadmap so they will have a better prediction of their resources. Having an IT budget under the operational expenses is unavoidable these days and it surely can get a bit overwhelming especially for mid to larger enterprises as they have much more to plan for. 

 

Free Template For You

We have also created a basic checklist & budget outline for your usage, click here to download it for free

 

If you’re still unsure if you are doing it right, or do not have a proper technology management team to help u with budgeting, outsourcing to a vendor can help you fully alleviate your doubts and frustrations.

 

At Computer guys, we will work closely together with you to understand your present needs and future concerns. Rest assured that your IT assets will be professionally maintained and looked after. From user support to customised IT solutions, leave it to us to provide you with a holistic experience that is suitable for your business. 

Author

Vivien Wong

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