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How to Create an IT Budget + Free Template

by Powernet - Aug 19, 2020

Even the most powerful technology platform that money can buy is ultimately still just that — a platform. It's a tool and how you use that tool is all that matters. When leveraged correctly, IT budgets are more than just a roadmap for investment in technology — they're an investment in the future of your organisation that guarantees these assets are properly aligned with your long-term goals.

This is why IT budgets are both so important and, unfortunately, so hard to get right. 

 

Technology is at the heart of running every business, it is touched by all team members in every business in one way or another. From a receptionist fielding calls, to a cleaning team clocking in for their shift, it really is at the heart of business operations. 

 

IT should be there to complement your business objectives and support your team. This is why we firmly believe in developing a technology strategy before making any technology investments, regardless of your company size. You want to make sure that each component of your technical make up talks to each other, and also achieves exactly what your business needs it to do. 

 

The high level process should look like this:

 

1. Review business plan 

2. Create IT strategy 

3. Generate IT budget 

 

Of course, there are other steps to take in between these big ones, like workforce assessment surveys and discovery workshops - we have done many and can help you with these! If you would like support creating a technology strategy, IT budget or would just like some IT leadership advice, head over to our IT Leadership page, we would love to help.

 

In a broad sense, you don't have to look very far to see why proper IT budgeting is so important. IT budgets do more than just allow you to set and achieve profit goals. They also allow you to cut unnecessary spending, track revenue, expenses, and even cash flow. Lack of cash flow is the reason why as many as 90% of small businesses close their doors prematurely, according to Dunn & Bradstreet.

 

But again, this is about more than just making sure that you have the money you need to buy into the technology that you want. Getting your IT budget in order also allows you to properly allocate revenue to other areas of your business without worrying about coming up short. It's about having a plan in place that outlines how you're going to be able to handle required purchases, like equipment and other related materials.

 

Proper IT budgeting helps you prioritise which investments help you achieve your overall strategy. Whether you plan to migrate to a new software, use mobile apps, or upskill your team using new tools, IT budgeting helps you prepare for the future and ensures your IT initiatives are aligned with your organisational goals. 

 

Having an IT budget can make it easier to secure financing from current and potential investors or even financial institutions, as it shows that you're aware of how this particular investment is going to pay dividends down the road. The technology itself also allows you to better prepare for busy seasons and slowdowns — something that can have a dramatic ripple effect across your entire year.

 

More importantly, outlining your IT budget for a certain period helps you identify key areas that you may be spending too much on and allocate that to more important areas instead. For example, listing all your current IT expenses may help you find out that you are still paying for support on a retired software. Having this outlined in your IT budget gives you a clearer picture of where the bulk of your IT budget needs to be reallocated.

 

The Annual IT Budget

 

This Sample Annual IT department budget template tracks your IT expenditures per month for the entire year. In this sample template, we’ve added Staff training, IT related office supplies and equipment expenses, telecommunication expenses, Software and contract expenses, as well as IT Personnel expenses.

 

You can customise it according to your business' needs and add the total cost of your expenses for better idea of how much you’re spending on IT for the entire year. Additionally, we have broken it into CAPEX and OPEX expenditure, as we know traditional CAPEX environments are making their way out, to be replaced with subscription-based models. 

 

Happy budgeting!

 

 

Sample IT Budget

 

TAGS: it strategy, it budgeting, tips, Tech, IT support

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