IT Managers: Here’s Three Best Practices to Make the Most of Your IT Budget

IT Managers: Here’s Three Best Practices to Make the Most of Your IT Budget

According to a 2017 Tech Pro Research survey, information technology budgeting is getting more attention from upper management. Over 60% of respondents (all IT professionals) indicated their organizations would increase IT budgets for 2018. Within those responses, a surprising 8% noted their IT budgets would increase by over 20%!

As an IT manager, you’re likely jumping for joy at this prospect (though likely behind closed doors).

However, before reading too much into this trend, consider some additional context. Compared to the previous year’s survey, more respondents (36% vs 21%) believe their organization places greater value on budgets from other departments over the IT budget.

There are a few likely reasons for this. One could be because the organizations’ overall revenue and profitability increased, thereby providing additional funds for all departmental budgets. Another is management could think a specific IT initiative, such as cyber security, needs monetary backing. Lastly, IT is getting more expensive, and management may feel the function is just a necessary evil.

In any case, it’s imperative to make the most of these additional funds, as well as ensure the IT department remains a priority for management. Here’s three ways to accomplish this.

IT Budget Planning Best Practice #1: Prioritize Your Projects

Nothing siphons the IT budget faster than low-priority, low-visibility projects running amok. Since they don’t get much attention, the IT spend for these projects can go unnoticed. And while likely not much on their own, collectively they can represent a significant percentage of the department’s spend.

To combat this, set clear priorities for all IT projects and allocate the budget accordingly. Where possible, you can also combine small, like projects and their associated resources. This may be physical/system resources or human resources, such as employees with specialized knowledge.

Consolidating resources often results in lower overall spend by reducing redundancy, mitigating resource conflicts, and forcing prioritization.

IT Budget Planning Best Practice #2: Tie IT Initiatives to Corporate Strategy

The old saying out of sight out of mind is quite relevant here. Visibility is a key aspect in ensuring senior management is aware of your budgetary needs. Don’t just assume they find the IT function as important as you do and know how much is needed to support it. Make sure your technology initiatives are on their radar.

But visibility isn’t enough by itself. Relevancy is equally important. Ensure senior management understands how your initiatives link with business outcomes and align with overall business strategy.

And if your initiative is less tangible, you may need to create a proof of concept—something they can “see.” This will help not only solidify their understanding of what you’re trying to accomplish but also secure funding for your IT budget. They may even allocate additional funds for the project you showed them!

IT Budget Planning Best Practice #3: Hire Outside Consultants

There is a dangerous assumption by many IT departments that doing all work in house is cheaper than seeking help externally. And while this is true in some cases, it’s not true as often as IT leaders think.

The time and energy your staff spends on completing certain projects winds up being more costly. This is typically due to your staff not having the requisite knowledge, skills, or focus (from dealing with multiple initiatives).

For example, you may need to perform a major software upgrade of your accounting system from 8 to 10. Doing this in house, when your IT staff is unfamiliar with the ins and outs of the system and its different versions, could take longer and be more prone to negatively impacting mission-critical applications. And downtime is the last thing you want, especially if you’re trying to garner support from senior management.

In these cases, the better approach is finding an outside consultancy or vendor to support these specific efforts. Just make sure you are vigilant in identifying the right partner, as engaging with the wrong partner could be costly. Equally costly is wrongly identifying what your department actually needs from a partner—i.e., don’t ask for only X when you really need Y and Z, too.

Don’t have the in-house expertise to effectively tackle your next IT project? Factum can help.

Factum is a boutique IT consulting firm that’s lent its expertise to many Fortune 100 and FTSE 100 companies across the U.S. and Europe. We’ve helped larger corporations and smaller companies produce successful outcomes at the organizational and department levels.

From software selection & procurement to systems management to internal compliance, we can help you with a number of IT strategy consulting endeavors. Sign up for a no-obligation consultation so we can learn more about your unique challenges and suggest next steps.

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