Creating an IT Budget: 5 Key Factors to Consider When IT Budget Planning

Creating an IT budget can be challenging without the ample business research. According to TechCrunch, “IDC is predicting 6.8% growth, which is up from 5% last year. This number looks at hardware, software and services but excludes any telecom spending. Meanwhile, Gartner is predicting a bit higher at 8.2%.” IT budgeting can be tricky, but you’re not alone in this dilemma. Understanding the following five factors can aide in creating an IT budget for your organization and allow for a more efficient and cost-effective IT infrastructure.

Past Performance

Identifying your existing trends is the first and most important step to creating an IT budget. Recognizing these trends will help you determine how well your IT budget has performed in the past. If performance suffered, then you may want to increase your spending. If performance met or exceeded your goals, then you may be able to reduce your IT spend.  

Current Infrastructure

The size of your infrastructure will significantly affect your budget. An organization with a small infrastructure tends to prioritize upgrades and expansions to increase efficiencies, while an organization with a large, well-developed infrastructure prioritizes maintenance, upkeep, and patching.

Business Size

Company size matters when it comes to IT budgeting. A good rule of thumb says that the larger the organization, the more money they should set aside for unexpected circumstances. A larger number of moving pieces in the technology infrastructure translates into an increased potential for things to go wrong. This also means that there is the potential for accruing bigger losses. Organizations should mitigate these risks by investing more into preventative security measures, such as data backups, redundant capacity, and virus prevention.

Business Maturity

Business maturity also plays a large role in determining your IT budget. Well-established organizations are more likely to suffer larger damages if something goes wrong. This propensity should be accounted for when creating your IT budget. Mature organization will also have far fewer swings in their IT needs and can therefore make more conservative adjustments year after year. These firms should look for efficiencies in their current budgets. In contrast, younger organizations should focus on expanding and building up their IT departments.

Business Growth

Keeping your IT department lean is essential to maximize returns on any technology investment. This often means having just enough capacity to meet current business goals, and a little wiggle room to ensure that IT never bottlenecks. This also means that business growth will be a critical factor in setting an IT budget. Organizations will need to set their goals for business growth before moving on to their IT considerations. Without the former, organizations will have difficulty completing the latter. 

Need assistance building your budget?

Still not sure where to start with your IT budget planning due to changes in your network and IT environment? If you’d like assistance creating an IT budget, contact Dataprise to help determine your next steps.