As we navigate through the final quarter of the year, many of us are in the midst of reviewing, updating, and finalizing 2023 budgets.
If you are responsible for the technology budget, our piece exploring strategic IT budget guidelines is a great place to start. If you have an IT budget already underway, take a moment to consider whether you are including and covering all necessary budget categories to ensure that it is an accurate representation of next years’ expenditures.
When budget planning for your business’ annual IT needs, it’s easy to become hyper focused on big-ticket, ongoing expenses. For example, virtually all technology budgets detail out IT support costs, whether that be the salaries of an internal IT team or the contract costs of your outsourced IT support company or managed IT services provider. Likewise, many IT budgets include ample delineation of software licensing and subscription costs.
However, there is much more to an IT budget. Failing to plan for these important IT budget line items can leave you unprepared and scrambling to find dollars and resources when these unforeseen issues or needs arise.
Three often overlooked IT budget line items are IT projects, systems refresh, and accidents and cyber incidents.
All three areas are highly impactful to employee productivity and business operations. It is important to proactively plan and budget for upcoming needs to support a stable operational environment.
Sometimes, IT leaders consider project-based technology initiatives separate from the IT department budget. This removes visibility into what the true cost of a business’ complete technology expenditures will be. It causes confusion around what is and is not included in an IT budget and eliminates the ability to forecast future spending with accuracy.
Ultimately, when the IT project timeline kicks off, the organization struggles with how to fund it. This can result in delays to critical technology projects. Or worse, the business may choose to nix the project altogether.
However, these IT projects are often critical to cybersecurity initiatives or performance improvements. For example, a common way hackers gain access into an organization’s network is through compromised login credentials. Multifactor authentication (MFA) is a very effective way to protect against that very scenario. Delaying or canceling an IT project implementing MFA would not be in the best interests of a business’ cybersecurity posture.
Review your business’ IT roadmap and identify the IT projects that are in queue for the coming year. Then, add those projected project costs to your department budget to provide accurate visibility into spending and ensure those critical project dollars are available when you need them.
Technology has permeated most areas of modern businesses. You rely on IT to support employee productivity and operational efficiency. The systems your employees depend on can include traditional workstations like desktops and laptops, mobile devices, network infrastructure, software applications, etc.
These systems must be updated, optimized, and functional. In addition to ensuring that they are properly maintained, businesses must plan for when aging systems should be replaced.
An IT systems lifecycle refreshment plan is a great way to gain visibility into what, how many, and when systems should be replaced. You simply refer to the plan to identify what systems are due for replacement in the coming year and plan budget dollars accordingly.
It might be tempting to save budget dollars by keeping outdated and legacy systems in operation. However, there are many ways outdated technology can hurt your business and cost you more in the long run. From the hit on employee productivity, to the potential security holes it can open up, using legacy systems can be a risk your business shouldn’t take.
By properly planning out a systems refresh plan, you can prioritize and segment refreshes quarterly and yearly. This will ensure that your infrastructure is consistently upgraded, and your team is using optimized, updated technology.
Accidents or Cyber Incidents
According to the World Economic Forum, 95% of cybersecurity breaches are caused by human error. Although that sounds massive – and it is – it covers accidents and mistakes as well as cybercrime incidents.
Accidents can never be fully avoided. Humans make mistakes; it is inevitable. Some mistakes may not even result in a data breach, but still impacts your technology spending. For example, an employee may accidentally drop a tablet or spill coffee over a laptop and the system must be replaced.
Other errors may result in the types of cybersecurity incidents you see in the news. And these vary in terms of sophistication. Perhaps someone left a company device in an unlocked vehicle, and it was stolen. Or a remote worker accessed the company network from a compromised public WiFi network. Further still, an employee may be duped by a spear phishing email that results in a very costly ransomware incident.
Responding to these cyber incidents is not easy. It requires a lot of resources, effort, and time, which results in potentially heavy unexpected costs. In addition to having strong cybersecurity defenses, a proper backup, and a good recovery plan in place, today’s businesses should strongly consider cyber liability insurance to further protect viability.
Your IT budget should include line items associated with backup services, cyber insurance, and any other security solutions your IT team deems appropriate.
How to set a realistic and comprehensive IT budget
Budget planning is tough. All departments feel the pressure to cut costs, maximize their dollars, and prove return-on-investment (ROI). All three areas – IT projects, systems refresh, and cyber incidents – should demonstrate ROI based on their impact to employee productivity and business operations.
Work with your IT team or IT support provider to prioritize the areas that can have the most impact and define the benefit and ROI.
We hold biannual strategic planning meetings with our clients that are dedicated to smart IT planning. The goal is to align budget priorities with business goals and ensure that the dollars spent are expended wisely. The IT budget is tied closely with the client’s IT roadmap and project plan.
Collaboration with your IT leaders and IT support providers will help ensure you set an accurate, comprehensive, and well-informed IT budget to support technology expenditures throughout the coming year.
Learn more about IT budget planning and how it fits into your business’ overall IT Strategy with our guide: How to Build a Business IT Strategy.