IT budgeting is a crucial process for any organization that relies on technology to achieve its goals. However, it can also be challenging, especially in times of uncertainty, change, and innovation. How can you plan, forecast, and track your IT spending effectively and efficiently? Here are some tips to help you master IT budgeting.
Before you start planning your IT budget, you need to have a clear picture of your current IT assets, resources, and needs. This means conducting a thorough inventory of your hardware, software, licenses, subscriptions, contracts, and maintenance costs. You also need to identify any gaps, risks, or opportunities for improvement in your IT infrastructure, security, performance, and compliance. By assessing your current situation, you can prioritize your IT spending and align it with your business objectives.
Keep in mind that you do not need perfect data. In my experience, everyone's IT asset data is imperfect and will never be completely accurate. This is not an impediment to making sound business decisions. Be realistic about the quality of your IT asset data. Focus on achieving "good enough" data to inform your IT budgeting, forecasting, and chargeback processes. Put data quality maintenance processes in place to ensure that you're actively maintaining, or enhancing, your IT asset inventory.
In my experience, very important is tracking the hardware (servers, desktops, laptops, switches, firewalls, etc.) lifespan and warranty. You can get a clear picture, of when you need to spend money on hardware upgrades/replacements and plan accordingly by consolidating this in batches, say once in three months.
Baselining is the key here. Unless you know the starting point it is very difficult to really put some optimisation or savings scenarios or any changes in place. What is the spending, Where is it spending and how is the spending are the key questions. So getting detailed inventory is a good starting point
Once you have a baseline of your IT situation, you can start setting your IT budget goals. These should be realistic, measurable, and aligned with your strategic vision and mission. You should also consider the expected return on investment (ROI) and value for money of each IT project or initiative. However, remain flexible and adaptable to changing circumstances, such as market trends, customer demands, or unforeseen events. Build some contingency and buffer into your IT budget to accommodate any changes or emergencies.
I believe the key is reviewing your IT budget priorities from the perspective of your IT business goals. Are they aligned with your strategic direction? For example, is a large part of your IT budget being consumed supporting legacy IT assets, services or applications? If so, are these your top priority? If your IT business goals are different (bringing in new platforms, technologies, migrating to the cloud, etc.) from where your IT budget is being consumed then you need to look for opportunities to realign your IT spend.
A good plan is always which has SMART goals which always will be different for different organisations and everyone is right. Setting up the right realistic goals to measure change and success is a good measure to track the progress of the program
For forecasting, what I've seen work for businesses/organizations across various verticals includes knowing 3 things: 1. What you're working with Avoid robbing IT Project Peter to pay IT Initiative Paul with a list of anticipated expenses based on a clear & *realistic* view of the *current and upcoming* IT initiatives & projects 2. What happened before "Those that fail to learn from history are doomed to repeat it" applies to IT/IS budgets. It helps to take a look at past spending to understand trends & anticipate likely areas of overspending/underspending 3. The brainwaves Talk to the IT *and* the IS teams/leads (#CyberSecurity is a necessary cost) as well as relevant business units (initiatives & projects should deliver what they want)
To plan, forecast, and track your IT budget effectively, you need to use the right tools and methods. There are various software applications and platforms that can help you manage your IT budget, such as spreadsheets, accounting software, project management software, or cloud-based solutions. Choose the ones that suit your needs, preferences, and budget. Use the appropriate methods and techniques to estimate and allocate your IT costs, such as bottom-up, top-down, zero-based, or value-based budgeting.
A good tool to gather the inventory and establish a good baseline is important. No tool is 100% correct and no tool will do it all. Our process , policies will need to evolve with the help of the data and insights that the tool generates.
An example of a good asset management tool, oriented to small and mid-size companies is AssetExplorer by ManageEngine. It's a cloud-based modular software so you can configure it to your own needs. Also, it is part of a bigger family of ManageEngine products for IT Management and Automation.
There are some great tools out there that can enable your ITFM (IT Financial Management) processes. A couple worth considering are Proven Optics (particularly for ServiceNow shops) and Apptio. However, in my experience, the biggest limiting factor for most enterprises is a lack of business processes. In the absence of good business processes, no tool can be successful. Standardized processes for resource request, provisioning, tracking, and reclamation are critical for anyone that wants to realize the benefits of a mature ITFM model.
IT budgeting is not a solo activity. It involves communication and collaboration with various stakeholders, such as IT staff, managers, executives, vendors, and customers. Communicate your IT budget goals, plans, and progress clearly and regularly to all the relevant parties. Solicit feedback, input, and suggestions from them to improve your IT budgeting process and outcomes. By communicating and collaborating, you can ensure that your IT budget is aligned with the expectations, needs, and interests of your stakeholders.
What are the best practices for IT budget forecasting and tracking? Firstly focus only on delivering what the business really needs (notice I did not say wants). Set a budget (cost and benefit) to every demand. Have the business prioritise those demands. If there are more demands than resources and funds - then have the business reassess their needs. Once you have a clear picture of the what, why, how and when - begin your work and manage the budget with close CFO support. Form a governance group that will track, report and challenge delivery / outcomes to investment. Rapidly kill projects that add no or less value than intended and reinvest funds in more fruitful projects as quickly as humanely possible. Keep communicating.
IT budgeting is not a one-time event. It is a continuous process that requires monitoring and reviewing. Track your IT spending and compare it with your IT budget goals and plans. Measure the performance and impact of your IT projects and initiatives. Identify any deviations, issues, or challenges and take corrective actions as needed. Lastly, review your IT budget periodically and adjust it as needed to reflect any changes or new developments. By following these tips, you can plan, forecast, and track your IT spending more effectively and efficiently.
I agree but, in my opinion, the point of this exercise isn't to get good at budgeting. The point is to align your IT spend with your IT business strategy in order to best enable your overall business strategy. No one can eliminate all unforeseen needs or challenges. However, you can set yourself up for success by implementing a solid ITFM model that will handle a few bumps and keep your IT organization on track.
Here is an example of how to be flexible & cut costs at the same time: With HP's Device-as-a-Service (DaaS) model you can shift from making big upfront hardware investments to manageable operational expenses, freeing up capital for other projects. It also simplifies IT management by handling device procurement, deployment, ongoing support, and even end-of-life services. It keeps devices up-to-date, reducing downtime & related costs. In today's world where remote work & flexibility are the norm, DaaS enables businesses to scale their workforce up or down easily. This flexibility not only supports cost control but also enhances agility & responsiveness to market changes. #HPWorkforceServices #DaaS #CostSavings #TechSolutions #HP
Automated IT asset discovery in large diverse environments presents a particular challenge for ITFM. Solutions often involve more than one tool and some level of customization in order to provide "good enough" data to enable IT business views and decision-making. Be wary of solutions that claim to handle all environments and don't be afraid to push the envelope with hybrid solutions in order to achieve success.
Agree with all of the above points mentioned here. Also in addition to this it is also the business perspective . What is the level of growth the business is expecting ? What will be vis-a- vis increase or decrease in IT budgets. Cost per customer , cost per service etc are new measures which will then also help to estimate potential increase in the budgets and plan things effectively
In my experience different organisations use different budget forecasting and tracking techniques and applications. In many cases the core tracking requirement was around resourcing. Though how resource time and costs were calculated varied. Forecasting and reporting tools also varied, from customised spreadsheets to more formal project financial tracking tools. So, a key requirement, especially for contractors, is to understand the organisations forecasting and tracking methodologies. Including the amount of 'flexibility' to build into the projects costs, schedule, resourcing requirements of the project. As these vary between organisations.