Memo for the preparation of the IT budget

It’s better to lose once a day, and then agree on everything in 5 minutes

Budgeting and justifying IT costs is a fairly simple procedure that allows company management to see the benefits of investing in technology, while technicians share responsibility for the state of the IT infrastructure with management.

Annual IT budget planning for a technician is an opportunity to focus on systematic technical work, doing away with the practice of patchwork-piece investment and constant raising money. I decided to share my budgeting experience and made a small note.
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IT budget planning can be divided into three phases:

First stage: gathering information

To compile (and justify) an IT budget, you need to know:

1. What the company has already bought in the past and for what it continues to pay in the present, namely:

• used and reserved equipment
• software licenses
• service contracts,
• carrier services,
• consumables and their costs.

2. What information technologies are used in the company and for what.

A complete list of services (IT services) that a business uses in its work, ranging from the banal “e-mail”, “printing documents”, “telephone communication”, and ending with management systems, security and specific business applications.

How can you use this directory of services (IT services)? Read at the end.

3. What are the goals, plans and objectives of the company for the next financial period, what problems should be solved?

Reorganization of departments, increase in personnel, the emergence of new tasks, changes in requirements for performance, reliability and security of information systems.

At this stage, it is useful to talk with both the company's management and the heads of departments to understand their needs for changing the quality of service, reliability, convenience of working with systems, and also clarify the list of IT services they use. Additionally, you can conduct a survey of users, collect the received recent requests.

Second stage: analysis

The task of this stage is to find those points that are preventing us from achieving the set goals at the moment or can prevent them in the future. For this, I recommend analyzing the following indicators:

• Performance.

Is there enough performance for all users at the moment? Is the current level of system performance to business expectations? What is the weak link now? Will there be enough productivity if the load grows in accordance with the development plans?

• Reliability.

Have adequate measures been taken to ensure data integrity? Is it permissible to change the equipment as it fails or should it be updated in advance? Can you recover in the event of a failure in the required time, or do you need to purchase additional equipment or software in advance? Are there any known problems that affect the reliability of IT systems?

• Functionality.

Do existing applications solve user and business problems? Do they solve them effectively? What is the company getting less now? What needs to be changed to meet future requirements? Are existing business applications relevant at all?

• Security.

Are company data protected from external threats? And from the internal? Is the protection system at the level of threats? How will information security requirements change in the foreseeable future?

• Convenience.

Does anything create discomfort in the work of users with computer equipment? Are printers conveniently located in the office, are computers noisy, are all interfaces and systems understandable for users, are they still complaining about something? Can this be improved?

• Operating expenses.

Are existing operating costs optimal? Do they match the market value? How much does a service cost a company every month? What are these expenses? Is it possible to reduce them without harming the company?

• Stocks

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Are there necessary supplies? How much additional equipment and licenses will be needed in case of expansion? Will additional one-time or permanent services be needed in case of a planned business development?

Stage Three: Budgeting and Justification

Actually, all the main work was done at the previous stages. The last task is to present the findings to management in a way that is understandable and easy to make decisions. I usually share all expenses in the following categories:

• Operating expenses for the maintenance of activities: consumables, service contracts, services, remuneration of specialists.
• The necessary capital investments, in the absence of which there may be serious losses for the business. This includes expenses that the company cannot avoid and the only question is whether it will invest money in it in advance, or when it will incur the indicated losses.
• Recommended investments - in combination with the necessary ones, can significantly increase the performance indicators, as well as eliminate risks that may have a negative impact on the business.
• Development-related expenses are the necessary amount of investments to ensure the operation of the systems and to maintain quality indicators in the event of plans to grow the business.
• Possible investments that improve the functionality and / or usability of employees with IT systems. This item is a red rag for financiers, allowing them to deny you this part of the budget and thus fulfill their duty with honor, without fear of consequences.

And the last but the most important detail is the rationale for each of the budget items. Business, unfortunately, does not operate with the terms "six-year server" and does not understand anything in technology - it operates only with categories of needs for IT services, opportunities, risks and their cost to the business. The service catalog (IT services), which you did at the very beginning, you need in order to communicate with the company management in one language - this is your point of mutual understanding. Having identified the need for equipment, software, personnel, etc., justify the need for them with specific indicators of the work of the final IT services (risks, quality, reaction speed, etc.) that the business receives or will receive.

Successes!

Ivan Kormachev
Company "IT Department"
www.depit.ru