Why We Love IT Budget Planning (And You Should, Too!)


There has been a change in how the economics of IT is viewed. Today, CIO - Chief Information Officer - and IT Director are senior executive level positions reporting directly to the CEO, COO or CFO in Fortune 500 companies. If you are a smaller company perhaps you are performing many of the functions provided by those executives, scaled, of course, to your business. If so, we’ve come up with some reasons why you should love IT Budget Planning as much as we do.

One of the changes that has taken place in the world of technology is the way IT cost is viewed. In the past when it became necessary to upgrade an IT system or some component of an IT system, the question was “how much is this going to cost?” Today, companies take a much broader view when considering the financial impact of information technology. IT leaders now ask, “how can we get the greatest value possible from our IT strategy?” Put another way, IT leaders look to control technology costs while making sure spending supports current needs and goals for growth.

Why do we love IT budget planning so much? Because in addition to providing IT support we can help you obtain information that you need to develop a more refined budget that will assist you in determining costs you may not have considered in the past. The outcome is that you’ll get more facts to help you get you closer to Total Cost of Ownership. That is rewarding to us and it should be satisfying to you. Once we know your true budget we can get to work on a detailed plan that will effectively leverage your current technology to meet your short term needs and develop strategies that will support your goals for growth.

Let’s take a look at some of the aspects or sectors that today’s IT leaders manage. We can help you determine these factors as you establish a budget and we develop a detailed technology strategy to take your system from planning and deployment through retirement.

Capital Expenditure (CAPEX): business expense incurred for benefit beyond current taxable year. For example, buy a computer.

Operational Expenditure (OPEX): expenses incurred for day-to-day operation. For example, ongoing cost to support IT system.

Fixed Costs: costs that don’t fluctuate with changes in production, sales, etc. For example, the lease of computer equipment.

Variable Costs: costs fluctuate directly with changes in production, sales, activity etc. For example, fluctuation in business activity could cause fluctuation in printer cost, e.g., toner consumption.

Direct Costs: costs directly attributed to an object, e.g., network hardware and software.

Indirect Costs: costs not directly attributed to a cost object, e.g., support expenditure.

RtB (Run the Business): What costs have to be incurred to keep the business running in the very short term? E.g., in terms of IT where do I need to allocate my resources today so that I’m still in business next month?

CtB: (Change the Business): What changes need to be made - and what are the costs - to make sure I’m in business next year? E.g., what changes to my IT system will ensure that my business is still viable a year from now?

Whether creating a budget seems like a daunting task or it’s something you rather enjoy, just know that we love it and you should, too!

Have you created a detailed budget? Let us know how that worked out for you in the comment section below.