Keys to calculating an appropriate IT budget for your company
Why is it important to accurately calculate your company’s IT budget? Here we tell you what you should take into account for its calculation and the types of budgets.
Accurate IT budget calculation enables companies to have the resources they need to meet their business objectives. It also helps companies reduce the risk of disruptions to their operations and prepare for the future.
What to consider when calculating your IT budget
When approaching the crucial task of calculating the IT budget, it is essential to consider several elements that directly impact an organization’s efficiency and technological innovation.
IT budgeting is an essential process that helps companies ensure their IT resources are used efficiently and effectively.
- Detailed review of current costs
Before embarking on any budget projections, a thorough review of current IT costs should be conducted. This involves analyzing both direct and indirect expenses and identifying possible areas for optimization and efficiency. This will help identify areas where savings or improvements can be made.
- Training and technology needs assessment
The constantly evolving technological landscape demands a continuous assessment of training needs and the incorporation of new technologies. This analysis ensures that the team is equipped with the necessary skills and tools to stay ahead of the curve.
- Updating IT security requirements
Information security is a fundamental pillar. Updating IT security requirements not only means keeping up with emerging threats, but also investing in robust solutions that protect the company’s digital assets.
- Technology infrastructure analysis
Replacing obsolete hardware and renewing software licenses are essential components of the IT budget. This analysis ensures that the infrastructure is capable of supporting current and future operational demands.
- Strategic definition of IT profiles
The IT workforce must be aligned with the company’s strategic objectives. Defining whether it is necessary to incorporate new profiles, either internally or externally, is crucial to covering the required competencies and ensuring effective project execution.
In short, calculating the IT budget is not simply a financial task, but a strategic process that allows you to put technology to play in your team in pursuit of greater competitiveness.
Types of IT budgets
Let’s take a closer look at the different types of IT budgets and how each plays a key role in the financial management of this strategic area.
Capital budget
This type of IT budget focuses on long-term investment in tangible and intangible assets and is used to plan and control capital expenditures. Capital expenditures are those made to acquire long-lived assets, such as:
- equipment
- software and perpetual licenses
- facilities
It is important to note that the IT capital budget is used to plan for the acquisition of new assets, as well as for the upgrade or replacement of existing assets. Some of these assets can be hardware, software, networks, telecommunications, and security.
The IT capital budget is usually prepared for several years, as IT assets typically have a long useful life, and must be approved by the company’s management.
Operating Budget
In contrast to the capital budget, the operating budget focuses on day-to-day expenses and ongoing operations. It encompasses recurring costs such as:
- salaries
- system maintenance,
- cloud services,
- subscription licenses,
- supplies and other necessary expenses.
Optimizing this budget ensures operational efficiency without compromising the quality of services.
The IT operating budget is typically prepared for one year and must be approved by IT management.
Project Budget
The project budget is used to plan and control expenditures for a specific project. Projects can be anything from the development of new software to the implementation of a new IT infrastructure.
This type of budget is used to plan IT expenses that are necessary to complete the project such as:
- salaries,
- professional services,
- hardware,
- software and
- licenses.
This is usually prepared for a specific period, as it depends on the duration of the project. In addition, thanks to this approach, it is easier to have control and evaluate the results more accurately.
It is important to highlight that through the development of each of these budgets, it is possible to approach the IT department’s investments comprehensively. Thus achieving a complete and strategic financial management for the IT department.
How an IT strategic partner can help to achieve an accurate calculation
Achieving an accurate calculation requires an integral vision that allows to meet current needs and foresee future ones.
A strategic partner with experience in 360° IT management is key. They can provide experience that allows identifying the resources needed to support growth and contribute to the sustainability of the business. At the same time, it offers updated information on the latest trends to ensure operational continuity.
At Wezen, we offer a team made up of specialists from different IT-related disciplines that can bring great value to the IT budget calculation process.
So if you need to optimize your IT investment to drive innovation and ensure a quality service, you can count on us. We will help you calculate your IT budget.
