IT planning and budgeting is not always a clear, straightforward process. During this potentially excruciating process, business managers juxtapose their current expenditure with historical and projected future spending. Ironically, many organizations still struggle with keeping their costs low despite the economic pressures weighing down business operations.
Fluctuating business goals and sporadic trend shifts have been synonymous with the poor spending patterns we see from our experience as a leading MSP in South Florida. Businesses across the country tend to overspend scarce resources on duplicate IT purchases and other infrastructure that may not align with current or near future objectives. Tighter budgets are a huge problem facing digital transformation alongside lack of employee buy-in and limited managerial support, which accounts for the failure of 70% of all digital transformation programs.
Combined, these elements can breed a host of challenges for small and medium-sized businesses. Responsible business leaders are urged to fixate on technology investments that create value, streamline operations, and drive profitability. To help you out in your journey, we unpack the key ingredients for successful technology planning and budgeting in this article.
Take Inventory of Existing Tech Infrastructure and Costs
Recent statistics put IT spending at 3% to 19% of the total revenue for most organizations. In another report, businesses slashed their IT spending by 30 percent as researchers discovered that companies spend $1000 – $3500 annually per employee on software tools alone. These numbers highlight a fundamental issue in today’s IT landscape. Businesses, particularly small and medium-sized businesses, are incurring potentially unsustainable costs on IT alone with limited returns.
As such, your IT plan and budget should focus on three key areas: people, processes, and equipment. Some major costs to consider include but are not limited to:
- Hardware – Take note of your spending on networking components, servers, desktops, laptops, phone systems, wiring, and peripheral devices. Take into consideration the energy consumed by these devices and keep an eye on repair and maintenance costs, support and consultancy charges, as well as leasing and hosting fees.
- Software – Any software that runs on your company’s devices attracts or incurs additional costs such as subscription fees, maintenance and updates, third-party support charges, testing and quality assurance.
- Labor costs – Factor in user training, outsourced or in-house specialist staff recruitment, user training, salaries, benefits, and taxes.
With a clear overview of the cost, another important factor is to conduct a keen review into how your employees work with the tools at their disposal.
More and more companies are adapting to the new remote and hybrid working conditions, which signal additional investments in team management software, more capable servers, and robust cybersecurity features. With increasing remote employee demands comes the need for the incorporation of cloud-based services that allow for more flexible access. Such investments carry additional cost implications.
When thinking about such investments, business managers also need to think about their long-term growth objectives. If your current technology will not suffice to support future growth objectives, it’s time to think about alternatives (or successors) to the existing infrastructure and their cost implications.
These may manifest in the form of installation, new purchases, and the upfront costs of migrating to a new system.
Consider Your IT Solutions’ Life Cycle
Like every other business asset, any and all business technology solutions deployed will follow a predictable life cycle, from the moment they’re launched to the moment they become outdated or obsolete. An in-depth understanding of your tech assets’ lifecycle enables you to adopt the most efficient technologies that you need to sustain operations and uphold your competitiveness.
Adequate technology lifecycle management bolsters your organization’s ability to accurately assess existing systems, deliver quality services, improve customer experiences, and drive innovation. Going forward, it’s estimated that 75% of businesses will likely adopt new, advanced technologies likely in response to the increasing demand for advanced technology such as AI, cloud computing, and machine learning.
Technology lifecycle management follows up on the introduction of new technologies, their performance, with usage, to the exact moment they’re withdrawn from active service. Tech lifecycle management is essential since implementing digital solutions will be an ongoing process that needs to be factored into your technology plan and budget.
Today’s tech investments run on a 4-6 year cycle, and failure to replace damaged components or provide adequate maintenance could cost your business dearly in the long run.
Weigh the Impact on Security Early
Security is a non-compromisable aspect of tech planning and budgeting. Often, small businesses present themselves as low-hanging fruit for malicious attackers in search of easy targets. The consequences of a successful cyber breach can be far-reaching. Organizations that face successful breaches risk incurring losses on their stock price and their bottom line.
Cyber incidents also eat away a company’s financial, human, and information resources, leading to an increase in the cost of business. Unplanned system downtime, ransom payments and lost revenues can bring up the cost of service delivery to unprecedented levels as organizations race to recover losses. But when looking for areas for cost-cutting, it’s important to keep in mind the state and quality of cyber defenses.
This means investing in high-quality software and hardware products. What’s more, consider investing in regular maintenance and upgrades for existing software and devices in response to evolving technology. Where security is a major concern, consider seeking help from a seasoned security-first managed IT provider.
Bonus: Hold Conversations with Users (Specifically, Employees)
Employees are usually on the receiving end of any technology decisions you make. Any investments or moderation to your IT directly impacts their performance, experience, and productivity. As such, their input would be invaluable in making your upcoming tech investments.
In particular, pay close attention to their pain points. In our experience, fresh tech investments such as new technical systems and equipment may subject employees and users to a steep learning curve. User training can help get employees up to speed on the new system. However, this also poses questions about the security of the organization’s network as these new changes take effect.
Make Smarter IT Budgeting and Planning Decisions with Expert Help
Unlike large corporations, small businesses operate on limited capital reserves. This implies very little room for error. For this reason, we strongly recommend seeking the services of an expert IT consultant from a third-party managed IT provider. At Boomtech, we specialize in providing technical assistance to help small and medium-sized businesses in South Florida reign in their technology expenses and acquire the right tools and technology for their business needs.
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Hear from Philipp Baumann, owner and founder of BoomTech:
