Budgeting is a crucial aspect for any company's continued success; with costs rising every year, budgeting a business’s funds correctly is a cornerstone for any profitable organization. While budgeting for traditional departments is difficult enough, most often, it’s the Information Technology (IT) budget that can leave teams scratching their heads. While being the main enabler of any business, the IT budget can be painfully underprepared.
Although the world of IT can be daunting to the uninitiated, there are some simple steps a business owner can take, and technologies they can familiarize themselves with, to make the process of budgeting for IT in 2018 as simple as any other department.
An IT Budget Is More Crucial Than Ever
With most businesses having a large part of their presence, tools, and products on the web, an IT budget is more crucial in 2018 than ever before. With most corporate entities dedicating more and more of available funds to their IT needs, IT has an increasingly critical role to play in a business’s day to day operations.
In fact, in a recent report by Tech Pro Research, a majority of respondents said security will be a top priority in 2018 – and after numerous high-profile cyber-attacks in 2017, these numbers don’t come as a surprise. Among the top priorities for IT spend in 2018 included hardware, software and cloud services that support security initiatives.
Capital Expenses (CapEx) vs. Operating Expenses (OpEx)
Traditionally, IT budgets have fallen under the umbrella of capital expenses, often abbreviated within the finance and accounting worlds as CapEx expenses. Many companies are successfully shifting some or all IT expenses to the operational expense ledger, similarly abbreviated as OpEx. There are three major advantages to the OpEx model to consider as you budget for the coming year.
- Buying products and services under the OpEx model tends to be cheaper. It’s usually easier to get approval for several thousand dollars per month than it is to get the okay to spend several hundred thousand dollars all at once. Additionally, there isn’t any investment past what you need.
- OpEx simplifies budgeting year to year as costs and terms become predictable month over month. As an example, buying a few dozen servers for a temporary development project wouldn’t make sense, because there might be no need for the hardware after the project is completed. Conversely, it’s well worth taking on an enterprise cloud storage environment for a few months that can be easily cancelled once the development project is finished.
- Also, with OpEx, what you’re getting is extremely transparent. For instance, we used X amount of storage this month and paid X amount for it. With CapEx, it’s sometimes difficult for the IT manager to explain exactly how the company benefitted directly and indirectly from a $500,000 purchase. In an age where ROI is everything, this makes life for the CIO or IT manager a lot easier.
A Cloud Based Industry
The technological sides of businesses are increasingly off-site, meaning that they’re more and more reliant on cloud-based technology, allowing employees to access their company’s information, tools, and resources through the Internet as opposed to a localized source. With more and more businesses utilizing SaaS (Software as a Service) products and technologies, the need for a reliant and secure cloud connection is becoming increasingly important.
If your business is stretched over multiple branches across the globe, the use of a WAN (wide area network) becomes tantamount to the successful operation of your business; and the threat of slow, unsecure, or generally unreliable cloud service becomes almost guaranteed. If you already use a WAN in your business’s operations, an SD-WAN (Software Defined Wide Area Network), can help increase performance and security for your day to day operations.
SD-WAN for Dummies
An SD-WAN is essentially a wide area network that differs in a few key ways:
- It removes the need for routing hardware
- It’s easily manipulated remotely
- It’s inexpensive when compared to traditional IT solutions
SD-WAN takes the overly complicated setup of a traditional WAN and allocates most of it to a cloud-based network. From traditional WAN functionality, such as managing a WAN for a business’s use, to more exclusive functions, like Virtual Private Network set up, an SD-WAN moves all these tasks into easily accessible cloud-based software and applications. It can also negate the need for costly routing software, which allocates the use of bandwidth in a WAN by allowing businesses to automate or easily customize the use of network bandwidth from the cloud.
Compared to traditional WAN software and IT needs, an SD-WAN can drastically reduce the cost of managing your businesses WAN by providing the tools to make management quick and easy. It provides a suite of solutions for WAN management, allowing business owners to allocate funds to other IT needs.
General Tips for a Successful IT Budget
Apart from switching to a cloud-based network, there are other steps and general guidelines that you can take to implement a successful IT budget for the coming year.
- First, make sure that communication between your budgeting team and your IT team or provider is airtight; a lack of communication can mean a misallocation of funds that can spell disaster for a certain facet, or in the worst case, the entire company. A lacking budget means holes, and those holes will be filled with hang ups as your underfunded IT team struggles to work with the funds they have.
- Budgeting should also be a proactive activity – planned and revised well before its actual implementation, as opposed to a mad scramble to put figures next to names. If a budget is put off until the last minute, the rush will be felt throughout the remaining year as additional time is spent trying to correct the flow of available cash to those who need it.
When it comes to a budget, especially an IT budget, time is just as important as the funds you’re working with.
- Budgets also need to be orderly; there’s no room for error or second guessing when it comes to maximizing the effect of every dollar available to your businesses sound operation. The use of an excel spreadsheet, or any other selection of budgeting template software, can help a business’s budgeting team keep track of the bigger picture when dealing with a pool of money that needs to be in the right hands. Make sure that the software, networking needs, and all other technological budgeting concerns are the ones best suited for your business; discussing the needs of your business with your IT department or consulting firm can mean the difference between crucial software and applications, and another unused icon on your employees’ desktops.