As the end of 2019 approaches near, the one vital aspect currently every running business needs to focus on is budgeting for the year 2020. Being prepared with respect to all critical expenses which might impact the profit and loss of a sound business is essential. The biggest of these expenses is the cost of maintaining and upgrading IT infrastructure.
While large companies have deep pockets and can manage the expenditure without any prior planning, small companies that are transforming from legacy systems to digital systems need to consider all the vital aspects that can either save the expense or caution incase a wrong decision is being taken. For this, IT budgets estimates are prepared based on which the funding requirements are ascertained. With a preplanned IT budget, the funding requirements that will keep the IT department and business running will be well-defined. That said, still, there are a lot of factors that need to be looked into before allocating funds for various heads and preparing an effective IT budget.
What an IT budget encompasses?
IT budgeting is the process of allocating funds (either internal or external) for conducting digital transformation within an organization which will then be utilized during the next period/year. The budget could include making provisions for recurring expenses like hardware leases, cybersecurity, servers, software, applications, cloud services, web hosting and telecommunication and audiovisual services.
Things to consider before budgeting
IT Audit: Conducting an IT audit is one of the vital steps necessary before preparing an IT Budget. This essentially includes taking stocks of current IT infrastructure and assessment of risk in the environment. This IT audit will identify security concerns and will look into loopholes that require greater attention.
The lifecycle of existing systems: Every piece of equipment and software currently being using the office has a limited life cycle. From enterprise resource planning software to client management suites and even the basic Microsoft Office become outdated with time. Keeping an inventory of all the existing systems and maintaining records on their purchase date, service
history, and lifecycle is necessary. Knowing exactly when the asset needs to replaced or require annual maintenance will eliminate unwanted expenses and overspending.
Existence of a legacy system: Is your business is still running mission-critical systems on a legacy system? Migrating to IT systems is essential and one has to make a move. Knowing if you are still using a legacy system and if it is holding you back is essential. At times, business especially small in size do not even know if a legacy system is being used and are not even
aware of alternative technologies. Modern software and hardware could improve efficiency and even enable interconnectivity between different platforms.
Consideration for Cybersecurity: The talking point in any budget meeting needs to be disaster recovery and uninterrupted business operations. For this, the budget needs must take into account firewalls for ransomware, cybercrime, and viruses. According to a study published by Deloitte, financial services on average spend about 10% of their IT budgets on cybersecurity. This is essential to avoid the situation of a complete breakdown. Recently, in the U.S. CyrusOne data centers were infested by Revil (Sodinokibi) ransomware resulting in loss of customer data.
Moving towards cloud: Irrespective of the size of the business, moving to cloud is now feasible and can ensure business agility, reduce cost and enable decentralization, Further, this will allow remote accessibility which is a necessity considering the various cyber threats that can compromise on the physical infrastructure. But for making this transition, huge costs are
involved which needs to be evaluated alongside the benefits. For a small business, making such a move will be capital intensive and therefore adequate funds need to be present on the company’s accounts. In case, companies consider leveraging loans for such a move, calculating
the cost of interest is another component.
Researching the Right Technology: Companies need to look ahead and research the right technology that will help scale operations and improve efficiency. Before yearly budget planning, researching for new technologies and comparing them with existing solutions will help create a benchmark for companies.
Preparing a budget is essential to eliminate extra costs and keep adequate funds for future requirements but at the same time, keeping a tab on trends, advances and existing security threats will enable business managers to make informed decisions. Taking to IT consultancy firms will also provide the required know-how and help in understanding the current trends and innovations related to technologies. Lastly, for the right budgeting process, consulting with the account experts will eliminate unnecessary expenses.