How to create an IT budget for your business

Knowing how to create an IT budget can help you to keep a sensible limit on your hardware, software and IT maintenance spending. Even if your company relies entirely on digital technologies in order to operate, good IT budget planning can leave enough in reserve to respond to any emergencies.

In this guide we’ll take a look at some IT budget examples and some best practice for how to create an IT budget that works for you, including initial purchases of hardware, software and peripherals, planned maintenance and upgrades, and covering the cost of emergency callouts.

1. Set your priorities

Good IT budget management starts by deciding what you need from your IT systems. Do you want your staff to be able to work from home routinely and/or in response to emergencies such as natural disasters or pandemics?

Once you know what your IT infrastructure needs to deliver, this can guide your IT budget management as you work through building your capabilities and make key decisions e.g. whether to invest more into on-site hardware, or a faster, better network for reliable remote access.

It’s OK to have multiple non-related priorities, each with its own budget allocated, but try to avoid simply prioritising everything, as that will not help you to allocate future funds.

2. Learn from the past

IT budget planning is all about the future, but the best IT budget examples are found in the past. Learn from what worked well before, and then make the necessary changes to optimise that plan for your current circumstances.

You can work with external IT consultancies to create a fixed-price contract that covers everything you need. This way, you benefit from access to the consultancy’s expertise and experience, as they will have much greater knowledge of what goes into a good IT budget.

3. Focus on company goals

It’s easy to find yourself investing in IT for IT’s own sake, but the hardware and software you use should always be there to underpin your company’s overall goals in business, and your IT budget should similarly be driven by positive ROI.

Think about what your company is aiming to achieve in its current and future fiscal years, and align your IT investment with those goals for the best results overall. ERP platforms like SAP Business One can help with this by providing analytics and insights that turn your real-world business resources and results into actionable digital data.

4. Plan for ongoing expenses

While your IT budget needs to cover upfront costs such as hardware purchases and enterprise software licences, as your infrastructure grows you will need to be able to cover the regular costs associated with its maintenance.

This is a long list including expenses such as:

• Cloud/SaaS subscriptions
• Network costs e.g. bandwidth and storage
• Peripherals e.g. printer ink/toner, paper, keyboards and mice
• Recurring software licences and subscriptions
• Repairs, replacements and upgrades
• Staffing costs e.g. engineers and technicians
• Telecoms (especially IP voice and data)

This is not a comprehensive list – and the specific expenses you need to cover will vary depending on the size of your workforce, your use of remote working and whether or not you operate a paperless office.

5. Plan for projects

If you know you have a one-off project coming up, such as installing infrastructure for a new branch office or department, allocate the necessary budget. You may need to make modest savings elsewhere over several months or quarters in order to free up the finances.

Remember to also plan for budget ‘creep’ i.e. if your organisation adds 2-3 new recruits per week, each with their own workstation, by the end of the year that could be about 150 additional computers you need to buy and maintain.

6. Keep it secure

Cyber security should be a core part of your IT budget planning, especially if you operate in a regulated industry where data compliance failures can be catastrophic.

Antivirus/anti-malware, encryption, network firewalls and secure remote storage can all form part of a well-protected IT ecosphere, but don’t neglect the risk of human error too. With regular employee training, you can reduce your chances of falling victim to phishing scams and social engineering attacks.

7. Don’t cut corners

You have a real opportunity to take a data-driven approach to your IT budget management, informed by reports from your ERP platform and guided by third-party consultancies with expertise far beyond your own.

All of the tools are available to make a sensible, affordable investment into your IT infrastructure, its maintenance, performance and security. Be rigorous in your approach, and give your organisation the IT ecosystem it needs to outperform the competition.