Budgeting and planning season happens at the same time every year – but just like autumn, it’s a little different every time. And planning for 2022 is likely to be more different than “normal” since most companies made so many changes last year and there will likely be more to come in 2022. Given that, these tips will help you allocate funds realistically AND account for likely changes. They will also ensure your budget reflects both the IT department’s goals and your organization’s overall business strategy.
1. Look at last year’s IT spend. Break down what you actually spent on hardware (including installation costs and warranties), software licenses and support, subscription fees, and services like consulting and training. Look at all of these categories:
- Hardware, including owned and leased equipment like desktop and laptop computers, servers, switches, cabling, phones, printers, etc., as well as costs for cloud-based Platform as a Service (PaaS) and more traditional hosting/Infrastructure as a Service (IaaS)
- Software, including both licensed and SaaS solutions
- Data backup solutions
- End user training
- Data and telecom services
- Staffing, both internal and outsourced
- Upcoming one-time projects
- Security and compliance, including audits
- Cybersecurity and business interruption insurance
Given how much changed in 2021, don’t assume that 2022 will be more of the same. For example, if you migrated many key systems to the cloud this year to support a more remote or hybrid workforce, you might reallocate the savings to other parts of your budget.
2. Benchmark your IT spending. Break down your spending into capital expenditures, operating expenditures, and specific projects. Aligning your spending categories and amounts with industry benchmarks will help you justify your budget numbers. (Note: Our small and midsized clients typically spend 2 – 4 % of revenue on IT.)
3. Remember one-off activities. Critical procedures like audits and penetration testing may only happen on an as-needed basis – maybe not even every year – but that doesn’t make them any less important. Set aside time and money to make sure they happen.
4. Review your inventory of IT assets. Identify what needs to be replaced or upgraded so you can account for that in both your budgeting and planning. Look for hardware and software that’s approaching end of life, key systems like CRM or accounting that need upgrades, and subscriptions that are due for renewal.
5. Assume delays when planning year-end hardware purchases. Pandemic-related delays are still disrupting global supply chains, so if you want to buy hardware before the end of the year, place your orders by November and expect delivery to take 60 days or more. You’ll need to plan both your transition period and your implementation strategy accordingly.
6. Make IT plans for the “new normal.” In the last 18 months, some companies have closed offices, relocated, or opened new offices, and some have done all of those. If you’ve changed your workplace or are planning to, consider moving file sharing and other services to the cloud and outsourcing security and IT management. You might also need to plan for hardware in the office and at home. That’s an investment in making sure your infrastructure continues supporting all your employees, no matter where they are.
Don’t forget to work with your vCIO to develop your plan and budget. They can provide information needed to justify them.