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How to Prepare an IT Budget for Your Business

Budgeting can be tricky, and IT budgeting particularly so. Where some items, such as monthly support costs, are easy to estimate, others are rather harder – particularly if you don’t feel confident in your own IT knowledge. But with essential IT expenditure often representing a substantial spend, it’s vital to have a realistic idea of what to expect.

So, just how do you set about preparing a practical IT budget for your business?

Here’s our quick guide.

Think long term as well as short term.

What will you need to spend in the next year, and what might you need to spend over the next three years? Consider your business plans, and how these will affect your IT requirements. You may well find it makes sense to start on a gradual process of spending now in order to get to where you want to be in three years’ time, rather than simply budgeting for immediate requirements.

Look at previous budgets

Previous year’s budgets can be a useful starting point. Look at how realistic each budgeted cost turned out to be, and then factor in any changes you know will make a difference to the new budget.

Do an inventory of your IT assets

A full inventory will tell you what you’ve got and help you identify what might need replacing.

Include PCs, servers, printers, internet-related devices, phone systems. Make a note of the age of each, and assume you’ll need to replace older items on a regular basis. PCs, for example, last only three to five years; servers have a similar lifespan. Note down also whether items are still under warranty or not. You can then judge how much to budget as a contingency for any potential one-off repair or replacement costs.

List all your current costs

Make a list of every IT item you pay out for: Cloud services, maintenance, back up, security, anti-virus software, annual software costs, internet access and any other regular expenses. Establish whether any of these costs are likely to change over the year.

Think about infrastructure scaleability

Is your IT platform reliable and adaptable, and able to support long-term company goals? If there’s a chance it won’t have the capacity to support growth and change, then you’ll want to think about a new way of doing things and budget accordingly.

Build in any big projects

If you’re planning any significant projects, then it’s essential to factor in the IT requirements to support them. From moving offices to bringing new products or services on line, think ahead about what’s needed and budget for the appropriate IT costs.

Account for what any additional staff members might need

If you’re likely to be recruiting new people, work out what the IT costs will be for each one. A new PC is just the start. You may also want more laptops, more printers, more server capacity, enhanced broadband. And with a growing team, you may also need to factor in additional licence costs as software licence limits are reached.

Review the wider context

There’s much more to IT planning than simply looking at what’s happening inside the business. Think too about wider developments: What’s happening in your industry sector? It’s vital not to get left behind if competitors are investing in new technology. How are customer expectations changing, and how could you use IT to help meet them? What new devices, services and ideas could help you move your business forward?

Include IT training

New staff, systems or software can all lead to a need for additional training. The cost of this training might ultimately be put under a different budget heading, but it’s important to identify any training needs alongside planning IT developments.

Budget for three elements

With many IT investments, there’s more to budget for than the cost of the equipment or software itself. You may also need to allow money for both planning and installation/implementation.

Add in a contingency

Even the best-made plans can’t allow for everything. So factor in a contingency. What could go wrong, and what would it cost to fix?

Talk to your accountant

Discuss spending plans with your accountant, so he or she can advise you of how best make the most of tax planning possibilities. There might be some very good reasons to put new purchases in a particular tax year.

Talk to the IT experts

Unexpected ad-hoc costs are no help to anyone, and a poorly-thought through IT budget can cause real difficulties to a business. If you don’t feel you have a good understanding of your company’s IT needs, it makes sense to talk to IT experts as you do your business planning and budgeting.

A good IT support company will be able to help you understand what’s needed, both to keep you going as you are and also to move you forward. If you have an IT support contract in place, then find out if planning and budgeting is something the firm can help you with. If you don’t have a team to call on – or aren’t confident they can provide expertise at this level – then look elsewhere.

If you could use some support to make sure your IT budget reflects reality and matches planned business activity, we can help. Just give us a call on 0161 359 3689 or email [email protected].