Do you own a business and are plagued by expenditure-related woes? Can’t figure out where all the money goes? Read on to see how you can set things right.
Carefully planning and reviewing a business’ finances is a prerequisite for running it profitably. Unfortunately, not all business owners pay enough attention to this prerequisite. When budgeting for their business, an area that most business owners neglect more than the others is information technology or IT. If you’re guilty of the above then you need to know this: your business is bound to fail if you don’t create/maintain an IT budget for it.
What is an IT budget? IT budget refers to the allocation of money to various IT programs. Generally, hardware leases, staffing or Managed IT services are what make up the IT budget. In some companies, IT budgeting is an annual exercise while other companies create a budget for IT only when the need for it arises. Now that we know what an IT budget refers to, it’s time to look at why you need to have an IT budget for your business.
Why is budgeting for IT important?
As it provides the money required to keep your IT department running, IT budgeting is extremely important. Additionally, by creating an IT budget, you are able to identify the information technology initiatives crucial to your business. By creating an IT budget for your business, you will able to better manage your business assets, provide responsive services to your clients, and run your business more efficiently. Moreover, it’ll establish a spending guideline for your IT purchases while promoting accountability. On the other hand, if you don’t create an IT budget for your business, one of two things will happen: a lack of IT investment will affect your business operations or overspending on IT will leave little funds for other key business areas.
How do you establish an IT budget?
How much of your business budget should you allocate to IT? The rule of the thumb is that IT should consume no more than 10% of your business budget. Depending on the nature of your business, your IT budget can be anywhere between 1.5% and 10% of your entire budget. Also, when creating an IT budget for your business, keep the impact of IT on your business in mind.
Managed IT services are subscription based and generally offer all the services an internal IT department would offer including IT strategy / management. This enables businesses to create a predicable IT budget and control capital expenditures.
Need help saving on IT or creating an IT budget? Contact us today.