Tips for Setting An IT Department Budget

IT department budgets
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It’s hard to believe a new year is fastapproaching, but it is. That means that in addition to planning for the holidays, it’s also time to think about business. IT departments may be working on their budget plans, and you should look at this as a strategic time.

IT department budgets are especially important because of the digital transformation and large-scale shift to remote work we see happening.

A budget when you’re an IT administrator shouldn’t be an afterthought. It should show your organizational priorities, and it should be a time when you focus on making sure you’re implementing the best possible decisions.

With strategic thinking in mind, the following are some key considerations to set an IT department budget.

Know the Whys

IT budgeting is when you go through the process of allocating money to IT programs. These expenses and programs might include your recurring costs and also fixed-duration projects.

IT budgeting is how you keep your department running, and it also helps your entire organization stay more secure. A fairly significant percentage of your overall budget should be going to cybersecurity and more specific elements of that like identity and access management.

When you have an IT budget, it can also provide an overall departmental roadmap. You’ll see where your resources are going and if this is the appropriate allotment. For example, you may realize that with more remote work happening in your organization, you need to put more of your budget toward identity and access management, which is also relevant to a digital transformation.

A budget helps you prioritize your initiatives and also validate investments.

Don’t view your budget as an administrative process, or at least not exclusively. Look at it as a support and also validation tool for your larger strategy.

To begin budgeting, you need to look at what’s being spent currently and create a baseline.

You can look at who’s using what, the support they need, and whether any of what’s currently being used needs to be replaced.

What Do You Need to Identify?

Regardless of the specifics of your business, your budget needs to look at a few categories:

  • Hardware, including equipment, installation, and warranties. When you own a physical asset, there are costs associated with its maintenance.
  • Software including licenses and contracts.
  • Subscriptions can be variable or fixed and may include costs related to managed service providers, training, software, and hardware.
  • Services is a category that includes the costs of operations and initiatives.

Looking at Current Spending

Briefly, we touched on this, but it’s important that as part of your budgeting, you carefully go over your current spending. Where are their savings opportunities?

If you have shifted to a remote or hybrid environment, you might want to adopt services instead of software as an example. Then you can streamline your budget, and you’re also better poised to meet organizational needs as they currently exist.

You want to look for not only areas where you might be over-spending but also under-spending.

As an IT administrator, you want to understand the goings-on of other departments and how they function. You are then able to design a budget with those needs in mind.

How Much For Cybersecurity?

You always have to remember and put at the forefront of your budget planning that it’s far less expensive to prevent a cyberattack to repair the damage after one occurs.

There’s not one concrete answer as to how much you should be spending on cybersecurity, but you need to plan on spending around 10% of your overall IT budget on cybersecurity. This is the average for most businesses.

Your cybersecurity budget needs to be a well-defined and dedicated part of your larger IT budget.

As with anything in budgeting, consider your ROI when you determine cybersecurity spending.

Are you ready to move to a Zero-Trust security approach next year? If so, what should you budget for that?

Overall, research finds fully deployed Zero Trust can save you 43% on average on the cost of a data breach.

When you don’t have Zero-Trust as part of your cybersecurity strategy, and you do experience a breach on average, it’ll cost you around $1.76 million more than a company with Zero-Trust.

Even partially deployed Zero-Trust will save money.

General Tips for Better Budgeting

Along with some of the specific tips above, the following are some general ways to implement better IT budgeting:

  • Get the entire team onboard early on. They’re going to be able to provide insight that maybe you wouldn’t otherwise think of so you can make the best possible decisions for your company.
  • When you’re budgeting, think about agility.
  • One good way to stretch your IT budget is to work with freelancers. You can save time and money because they usually charge on an as-needed or hourly basis, saving overhead, and you can find the specialized skills you need to complete certain projects. Otherwise, you have to think about whether you need to hire more based on how overloaded your staff might be at the time. Can your staff handle support tickets? Could they be otherwise dedicating more time to value-added projects? How are your people supporting your technology projects, and could they be doing more if you brought on more people in any capacity.
  • Make sure that IT aligns with larger business goals.
  • Always leverage the cloud whenever possible.
  • Create a budget that carefully balances efficiency with cost. Too often with budgeting, the cost is the primary consideration, but efficiency will have its own set of benefits. Just because something is the cheaper option doesn’t mean it’s the most effective way of doing things.

When you’re budgeting, nothing is going to be definitive and unchangeable. It’s difficult to estimate, even when you are highly strategic and analytical in how you do so.

Don’t look at budgeting as too administrative. Instead, look at it as a way to set priorities and goals that will allow you to be part of what drives the growth of the business.

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