IT budgeting pitfalls you need to avoid

An IT budget determines the amount of money your company will be spending on technology that keeps your operations running and on IT projects that drive the business forward. Often, businesses assign IT leaders to create annual IT budget plans, allocate resources to short-term and long-term projects, and determine expenditure on things like IT staffing salary.

Unlike IT leaders of large corporations, those hailing from small- and medium-sized businesses (SMBs) are often unable to handle such complex tasks because they have far fewer resources. But that doesn’t mean SMBs can’t have a technology budget that works for them. If you’re an IT leader for a growing business, here are some of the budgeting pitfalls you must avoid.

#1 Viewing IT merely as a cost center

A cost center refers to a department within an organization whose functions don’t directly result in profits but are deemed important enough to spend money on (e.g., human resources department). Business leaders who view IT as a cost center rather than a profit driver tend to be tougher to convince to invest in technology.

For this reason, IT leaders must clearly communicate how investing in technology like the cloud can be greatly beneficial. They must explain that, for example, an infrastructure-as-a-service (IaaS) platform maximizes hardware efficiency, provides limitless availability, and reduces infrastructure costs. Otherwise, telling business owners to “move to the cloud” without explaining its compelling benefits may be met with indifference.

A recent study revealed that by 2020, 83% of business workloads will be in the cloud, mostly driven by the need for digital transformation, agility, mobility, and security. Tech leaders in SMBs can back up their budget proposals with this and other reliable facts. That’s because it may be necessary for some of them to persuade business owners that adopting cloud technology means they do not lag behind the competition.

#2 Inflexible IT budgets

Changes in technology requirements may cause problems if your organization has allocated substantial resources for IT initiatives that are expected to reap benefits in a year or longer.

To help you create a more flexible IT budget, you need to choose IT vendors that will allow you to change their terms of service and, more importantly, won’t bind you into restrictive contracts. It’s essential to choose a managed IT services provider (MSP) that can effectively assess your organization’s current needs as well as anticipate future demands.

#3 An IT budget structure that doesn’t align with organizational goals

From finance and accounting to customer relationship management to human resources, technology is undoubtedly a necessity. Still, it can be challenging for some IT leaders to propose an IT budget that aligns with the organization’s present and future goals.

For example, a business in the media industry needs a substantial digital marketing budget to gain a competitive advantage. Over time, that company may need to increase its data center budget and purchase more computers, and as a consequence, decrease its digital marketing budget based on fast-changing market trends. Some business leaders, however, may not fully understand how certain technologies align with their organization’s goals and priorities. For that reason, IT leaders need to explain how IT can keep them up to date with industry standards, run operations, and maintain a competitive edge.

#4 Paying for technology that no longer adds value

Eliminating assets that don’t add value to your business seems like a no-brainer. But it’s not so simple with IT investments because it usually takes a lot of resources to replace them.

Business strategies like mergers and acquisitions may also provide unforeseen obstacles to IT budgeting, primarily, having incompatible IT systems, hardware, and network structure. What’s more, employees may resist new systems and render certain tech assets useless.

In such situations, IT decision makers need to focus on consolidating useful tech assets and getting rid of those that no longer add value to the business. With efficient IT resource inventory and allocation, IT budgets can be streamlined and existing technology resources can be maximized.

Determining a business’s IT budget typically requires professionals who have expertise in both IT and business. At Hudson Valley IT Services, we offer businesses in Middletown, Orange County, Bergen County, and surrounding areas with IT solutions that enable them to maximize their technology assets and boost business productivity. Call our experts today to learn how we can make your IT budget work for you.