Banking & Finance and Technology

IT planning and budgeting for the New Year

December 28, 2015
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It’s that time of year when many businesses are making their financial plans and budgets for the upcoming year. This can be a challenge, as IT oversight commonly falls on the CFO for many small businesses that don’t have a dedicated CIO.

The questions often asked revolve around the “stuff” that needs replacement or new systems that are needed. Less commonly considered are the strategic decisions like: Is IT contributing to the success of the company? Which IT initiatives would allow us to move faster and more efficiently? Are we appropriately leveraging cloud resources where it makes sense?

Most of business today is done in the cloud. In fact, 80 percent of Fortune 500 companies are on the Microsoft Cloud. Several services incorporate the cloud into their business through Google, Microsoft or Amazon. So how does your cloud strategy fit into your IT budgets?

The big questions that arise are: What should my business be spending for my IT budget? Where should that money be spent?

If only there was a straightforward answer.

Technology spend depends on a variety of factors, the most significant being the industry. On average, the range is 1 percent to 8 percent of revenue. Professional service firms, banks and hospitals will need to spend more than a restaurant. Therefore, it must be evaluated based on your business’ needs and standards for the industry.

Assess the state of current technology (hardware and software)

IT supports business functions and objectives. In many businesses, properly functioning IT is essential to effectively doing business. Take a minute to evaluate your current IT environment and answer a few questions. Are people able to get their jobs done efficiently? Are the business objectives being met? How are your systems either enhancing or inhibiting the processes? Maybe you are running a software system from a defunct vendor that needs to be replaced, or an antiquated system that limits you or slows the business process down.

Align with business priorities

First and foremost, start with your corporate strategy. Where is your business headed? Is it growing and expanding? Or do you need to control your costs because you are in a shrinking industry? How can technology help the organization as it relates to business priorities?

Now is also a good time to take a look at your disaster recovery plan. Do you even have one? How quickly do you need to be able to recover? Also, how current does that data need to be? The biggest disaster cause is hardware failure, which accounts for more than half of all causes. Yet, a majority of these are preventable if hardware is managed actively and properly.

As an IT professional, emphasize areas of risk that are identified (consider a third-party assessment). Bring your concerns and the risks to the owners and managers of the company. Consider that when developing your budgets and plans.

Technology investment

Technology is a huge investment and ranges from everything that has a cord to software and business application process. Appropriately maintaining and replacing all that “stuff” is essential and can be costly. Start with an inventory and categorize. What do you have? How old is it? How important is it? What would happen if this died?

Software often gets overlooked, but it is the inner workings of your technology and needs to keep pace with the hardware. Consider what applications and technology are going to stay “in-house” versus moving out to the cloud.

Deploy

Now it’s time to execute on your best-laid plans. Follow these steps and continue to repeat the process. It is not a one-time planning process; it is continual based on changing technology and business needs. If you’ve done this work and asked some of these tough questions before, you understand how pivotal technology can be to the success of the company. We suggest as 2015 comes to an end, take some time to re-evaluate your plan and budgets. Follow these simple steps and involve the key players for best results.