Building an IT budget — especially with the way things have been going in the past 20 months or so — can seem like a daunting task for small businesses. Your IT department experienced a rise in demand from the rest of your staff. With more meetings occurring online and an overall increase in requests for support, your tech team may be looking to you for guidance on how to build an IT budget that safeguards your SMB’s business continuity.
On the other hand, you may be wondering how to balance those needs with a plan that doesn’t break the bank and instead gets the most return on your investment. Take a look at the following four tips for building an IT budget in 2021.
1. Create a Baseline for Your IT Budget
A great starting point for building an IT budget is taking inventory of all present and past technology expenses to create a baseline.
Starting with the most recent quarter, document all expenditures having to do with digital and hardware assets: computers, accessories, software, cloud services, etc. As you move backwards in time and quarter by quarter, try to identify all recurring expenses and document how often they occurred. Include wages for any full-time, part-time, or consultancy IT staff. If you or your IT manager have already created a budget for your business in the past, this is a great opportunity to review what changes need to be made and how the budget matches up with the reality in accounting.
Don’t forget to take into account any costs related to outsourced repairs and service requests, as well as technology-related shipping and delivery expenses to any staff working remotely. Other assets and services that could be easily overlooked are telecommunications devices and services like phone, celular, and internet. Don’t forget about the tools your sales, marketing, and human resources teams use like customer relationship management, content management, and talent management platforms and services. Some SMBs may choose to include printing expenses within IT, as well.
How far back should you go? In our experience, at least three to four years will allow you to consider how you responded to any fluctuations during either extremely productive and positive periods or unstable, difficult times in your particular industry. Understanding the changes that can occur over time will help you to predict patterns in the way your company does and should spend on technological assets.
2. Talk to Employees and Managers
When attempting to build an IT budget that will provide the best ROI, we recommend you consider how technology can help increase your employee’s productivity, performance, and job satisfaction.
Taking the time to understand the challenges and problems your staff face on a day-to-day basis is an excellent way to look into technology that could help solve these issues. Talking to stakeholders in each department will give you the insight you need to start building a plan that will position your company for growth.
What’s more, we suggest you engage key players of all departments together, in case there are tools and solutions that could serve more than one business unit. You could encourage your managers to hold team huddles with their individual contributors first, and then ask them to compile the feedback and report back to you.
Another way to collect this valuable information is to ask your IT manager to visit with teams while they are executing. Having IT witness firsthand the different processes and workflows, communication and technology gaps, and other pain points will provide you with the data you need to justify any and all new expenses that need to be included in your plan.
3. Align Your IT Budget With Company Goals
To build an appropriate budget, your IT manager will need to have insight on what the company goals are and how IT fits in with the bigger picture.
For example, being transparent about strategic human resources decisions will benefit your planning and budgeting in the long run. Consider this scenario: have you decided to hire two, three, or more sales associates in the following few months? What tools, hardware, and telecoms assets will you need to purchase to provide for the new hires? Will the sales team as a whole outgrow the current CRM pricing tier once you hire the new associates?
Is your company getting ready to ramp up a project that will require training, increased need for support from IT, more workstations set up or moved? Our suggestion is that you keep your IT manager in the loop when you’re planning this type of rapid growth. In fact, it may be helpful to take a page from managed services providers’ rulebook and establish a regular cadence of meetings between your IT department and C-level executives, so that they’re always privy to the bigger picture.
4. Cybersecurity is a Must
Did you know in 2017 our state developed and published a strategy for cybersecurity in Connecticut? This year, Connecticut became the third state to incentivize cybersecurity best practices for businesses. Connecticut has its own division dedicated to cybercrime and cybersecurity. As you see, strategists at the state-level are well-aware that “no one and no organization is immune” from cyber threats. This means SMBs, too. Especially in today’s world, cybersecurity is making headlines everywhere. Breaches and attacks are getting more sophisticated and more expensive. Thinking “My business will never be a target” would be a mistake.
Independent cybersecurity news and analysis site Threatpost published a list of 15 cybersecurity pitfalls for SMBs, based on a webinar they hosted in February 2021. During the live webinar, 57% of participants said they were not confident they were prepared for an attack, 29% said they were “medium-confident,” and only 14% said they considered their business to be ready to take on a cyberattack.
So what does it mean to be ready?
In CBIA’s 2020 Survey of Connecticut Businesses, 17% of 962 surveyed businesses stated their current greatest investment was in technology, while 29% — the majority — spent the most on employee training. While training your staff annually to be more aware of threats to your company’s security is important, we know from experience that your plan shouldn’t stop there. Adding a firewall and other out-of-box security solutions work to a certain extent. Our specialists recommend you include the costs of constant and consistent preventative monitoring from your IT team, along with the protection methods you already have in place when building your IT budget.
Summing It Up
New technologies are highly effective at improving bottom lines, but only if implemented in a gradual and smooth manner. Understanding the work culture, balancing human and technology resources, and defining business goals are critical to making digital transformations successful. With the help of an experienced Managed IT service provider firms can ensure the costs are reasonable and the desired ROI on technology is achieved.