The MBA Guide to IT

Episode 5 – How do I create an IT Budget?

The new year is a couple of weeks away so let’s talk budgeting.  How do I create an IT budget and why spend time on it in the first place?

Well, maybe you shouldn’t.  If IT isn’t significant to your business, just do a baseline budget.  Take last year’s spending, add inflation, pad for safety, and you’re done.  Of course, if IT isn’t significant to your business, the internet has a lot more interesting videos to watch than this one.

A budget helps you manage your cash flow – we all get that.  With a budget, you’re trying to bring your IT spending into the open so you can see what you’re getting for what you’re spending – and make better decisions over time.

It’s going to be easier if you have a roadmap in place, one that considers the needs of your stakeholders, the changes in technology or your company – maybe you’re expanding into a new office or entering a new line of business.  We’ll talk about IT roadmaps in a couple of weeks.

You can start with what you have – your staffing, PCs, servers, routers, phones, copiers.  Then identify your projects – move our ERP system to the cloud – wire 6 more offices for new hires.

Your budget is going to include your HW and SW purchases including licenses, warranties, service contracts and renewals.

It will include any services and service providers.  Your internet connection.  Your email filtering, your antivirus, your firewall subscription.  For some it will include external testing and audits, and security event monitoring.

It may also include cyber insurance.  And don’t forget physical security – cameras and alarms.

One final note…Your budget may not capture the Total Cost of Ownership which can be important when making purchase decisions.  You probably don’t have a separate power meter to measure the power and cooling of your computers.  And if your staff is doing a lot of their own maintenance, that won’t show up anywhere either.

Tomorrow, we talk about budgets and deferred maintenance.

Episode #5 – 12/17/2018

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