Introduction To IT Budgeting 101
Hey guys, this week on "When You Need 'Em, Ask Neadom," we're going to talk about IT Budgeting 101. What do you need to plan for when you're putting your budget together for your business? Do you need a million dollars?
Overview
Welcome to the week of "When You Need 'Em, Ask Needham." Today, it's video one of our IT budgeting series, and this is going to be an overview video to talk about the things we need to think about when putting our IT budget together. I've gotten different things I really want to think about. There may be more. If there are, let us know in the comments about what you put in your IT budget. That will help the whole community out there to help us plan this out. So, let's jump right in and take a look at this.
Hardware
The first thing that everyone thinks of in IT is hardware. We've got computers, servers, switches, routers, wireless access points, device or hardware that we have to plug into the network or that we are responsible for from an IT perspective. For example, a POS terminal or maybe even a time clock. Is that IT's responsibility? We do include that in our IT budget. So, hardware is the number one thing.
Cloud Infrastructure
The second thing we need to look at is cloud infrastructure. We're getting rid of some of our hardware for cloud software services, Office 365, G Suite, Amazon AWS, Azure, Google Cloud Platform. Whatever services you're using in the cloud, make sure they're included. Maybe you have a line-of-business application that's cloud-hosted. Include that in your IT budget. What are the yearly renewals? Typically, those renewals are a percentage of what you paid for the software. These things add up over time, so track when they’re due monthly, quarterly, annually and list them in your budget.
Services
The third thing is services. You may pay a managed IT company like mine to manage your infrastructure. Maybe you have payroll services or consulting projects. Know what those costs are and include them in your IT budget. Services are a key line item.
IT Training
The fourth thing is training for your IT staff. This isn’t end-user training, this is for your IT professionals. Typically, the budget is about $10,000 per person to keep them current. If you’re not setting aside time or money for this, you’re relying on employees to do it on their own. Include time off for training or testing in your budget. Training is essential to keep your team up to date.
Bandwidth
The fifth thing is bandwidth. How much internet service do you need? Do you need communication with other locations or your cloud provider? Bandwidth is critical. Make sure you have the right capacity for your needs and include it in your budget.
Lifecycle Management
The sixth thing is lifecycle management. PCs and computers die. Know what percentage of your fleet will need replacing during the year. If you have computers over five years old, plan to replace them. This helps you budget for hardware refreshes.
Software and Systems for IT Management
The seventh thing is software and systems for IT management. You may need remote monitoring tools, security software, or compliance tools. These can be priced per engineer, per device, or per node. Know what you need to run your organization and include it in your yearly budget.
Asset Management
The eighth thing is asset management. Track all your IT assets, who has what, where they are, and their value. This is important for financial reporting and insurance. Whether managed by IT or finance, asset tracking may involve labor, software, or labeling costs.
Security
The ninth thing is security. Security is more important than ever. Downtime from a security issue can be costly. Make sure you have a dedicated budget for security—hardware, software, and services. Break it out so you know exactly what you're spending.
Risk Tolerance
The tenth and final thing is risk tolerance. Understand what risks your organization can handle and still operate. Are you low-risk and need to avoid downtime at all costs? Or are you high-risk and can tolerate more disruption? Your risk tolerance will shape your IT budget.
Conclusion
That wraps up another week of "When You Need 'Em, Ask Neadom." Today we covered IT Budgeting 101 and the ten things you need to prepare for when building your IT budget. We’ll dive deeper in future videos, so check out the show notes and stay tuned. Be safe out there. See you next time! Reach out to us for assistance!
