7 Reasons to Create an IT Budget
Posted by Bryan Maggi on Mon, Oct 03, 2011 @ 09:18 AM
The purpose of an IT budget -
A budget tells your money what to do rather than figuring out where your money went each month.
Why do most small businesses avoid IT budgets? Fear, apprehension, economic and market uncertainty, commitment, and trusting someone else to manage the check book are all worthy concerns for owners/entrepreneurs avoiding budget talks.
In fairness, non-technical leaders are skeptical about whether their IT purchases are paying off. They are becoming increasingly frustrated with their IT leaders because they do not see, feel, or understand the value. As IT leaders, this is our fault. If you don't understand the business, it's needs, model, operation, how can you possibly recommend the right engine to drive the business? In short, you can't.
As we say at THINQ, "It's not all about the technology, it's about the business!". IT investments must foster the growth of the business, increase its efficiency, and align IT resources to business priorities. Forming an IT budget must address these concerns.
Here are seven reasons to start an IT Budget:
- Avoid unchecked, wasteful spending
- Tool for decision making
- Forecast total IT expenses
- Cap your IT spend
- No unexpected emergency ("as needed") IT purchases
- Increase the efficiency of the business
- Convert IT into a Profit Center
Ultimately, a well-oiled and managed IT is like running a business. The same General Ledger laws should apply to IT. It is important to measure the cost of capital for IT investments with an appropriate, measurable rate of return and the improvements to the business. No longer should IT be expressed in technical terms that few people understand. Instead, IT, if properly managed, should prove its value in the business.
Are your IT resources an overhead costs or profit center? Stay tuned as we breakdown each of the above budget points in the next several upcoming blog posts.
