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Posted by Marketing | October 31, 2014

5 Steps to Setting Your IT Budget for 2015

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If you want to save time and get your 2015 IT budget in 3, 2, or even 1 single step, scroll to the end of this article now. If you think you’d prefer to do some or all of it yourself, please read on.

Here are 5 steps to creating an accurate and complete IT budget:

Step 1: Audit and Review Your IT Assets and Processes

For this work, let’s define “IT Assets” as any technology systems you use in your business, including complex hardware like servers and firewalls; any applications that run on any devices; any cloud applications or services; simple peripherals like desktop printers or projectors; and all communications systems from office phones to mobile devices.

If you have an IT managed service provider (MSP), they can easily provide you with a comprehensive listing of all the devices they manage for you. The technology we use to monitor and maintain your servers, user computers and other devices is powerful. It captures an amazing amount of information that, if you know what you’re looking at, will tell you much about the state of your systems. The main question you want to answer when reviewing your IT assets for budget purposes is, “Is this thing near the end of its useful life and likely to need replacing in 2015?”

If you don’t have an MSP to give you an IT inventory report, there are free tools you can use like the IT Asset Management Software from our Austin friends at Spiceworks. It’s a great tool if you have someone on your staff qualified to install and run the software, and analyze the results.

IT asset management tools are awesome for automated inventory of devices that have IP addresses on a local area network, like server and personal computers, or network printers. The inventory report will also include information on the applications and updates on those devices. Other devices will need to be inventoried manually, like freestanding copiers, workstations that are not on the network, or conference room projectors.

Defining your IT processes for this exercise is as simple as asking yourselves, “How do we use these IT assets in our business?”

In Step 4, you and your team will assess the effectiveness of your IT systems and processes to determine whether any additions or changes should be considered.

Step 2: Audit and Review Your IT Spending in the Last 12 Months

The best managed services providers will meet with you regularly to review the current state of your technology. If you are outsourcing multiple IT services and systems to one MSP, they should be willing to provide you with a rolling 12 month review of your IT spend for those services.

In business review meetings MyITpros reviews a report like this with our clients:

IT_spending_rolling_12_months

 

In the example above, MyITpros provided no project or other work outside the scope of the managed service agreement, and the client purchased a handful of user computers on their own. The client is able to take this spreadsheet and add any other expenses incurred for a complete picture of their IT spend in the previous 12 months.

If you don’t have a report like this available, you’ll need to create your own. If you have an accounting person on staff, have them create it for you.
Review your P&L to find any other dollars you’ve spent for things like Internet or telephone services, website hosting, office equipment leases, software license or support or hardware warranty renewals.

Step 3: Create a Baseline Budget

Now save the last 12 months of IT spending from your rear-view spreadsheet as a new, forward-looking forecast. Change the dates, leave the amounts you don’t think will change, and adjust numbers for changes you are certain about. For example: you know the workstations in the accounting department and the laptops in sales are old and should be replaced; or you anticipate 3 new hires – including 1 in accounting because you’re tired of doing budget work yourself. And there’s that new iPad you want. :)

Congratulations, you now have a better IT budget than 99% of small businesses, who when asked about their IT budgets will typically answer, “My what?”

You may be done at this point, but as long as you’ve come this far, I recommend you take the following steps as well. You might save some serious money, or you could improve your company’s productivity and morale, or more.

Step 4: Assess Your IT Relationships and Brainstorm Your “Must Change” and “Wish” Lists for IT in 2015

List, look at and validate all of your IT vendors. Are you happy with your current MSP, Internet connectivity, phone systems, line of business application support, multifunction business machine service and support? Do you need more or less of anything, or is there something or someone you no longer need at all? Are you paying the right price for all of the above?

Now assess the relationships you have with your IT systems. Is it finally time to get a new server so you can update your line of business application that is now 8 years old and 5 versions out of date? Are you ready to stop buying servers every few years and move your data and applications to the cloud? Are you sick of waiting 5 minutes for your computer to boot up in the morning or stalling every time you switch windows, and ready at last to get a new one with more RAM and a solid state hard drive?

What else do you wish was better in some way, or do you wish you had that you don’t have now?

Step 5: Get Quotes and Finalize Your Budget for 2015

With your “Must Change” and “Wish” Lists for IT in in hand, you’re ready to get some price quotes and make some final decisions. Once you have the quotes you need, plug all the prices into your budget spreadsheet, sum the totals, and you’re ready to decide what stays and what goes.

You Can Reduce Some or All of These Steps and Still Have a Solid Budget

You’ve already guessed how to get all or most of this done for you, I bet, and you’re right. You just need a great managed service provider to do the heavy lifting. You and your staff will still need to invest some of your time and knowledge, but an experienced, business-savvy MSP that specializes in helping clients align IT systems with strategic business objectives will help you get this done quickly and easily.

If you’re a small to medium sized business looking for the best managed service provider in Austin, Texas, give us a call at 512-472-6000. If we’re not just that for you, we probably know who would be.

We’ve been doing this for over 21 years and understand when we’re not the right fit for someone. Luckily we know other great IT service providers in Austin and are always delighted to help you find what you need with referrals.

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Chris-BoyleChris Boyle, CEO

Please subscribe to view my upcoming articles. Our goal with this blog is to answer the questions you ask. If you have any questions about IT budgets or any topic email me at chris@myitpros.com.

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