Strategic Planning: How to factor IT into your annual budget

When working on yearly budgets, one of the biggest mistakes businesses make is leaving IT out of the planning process. Budgeting is about planning for as many expenses as possible so you’re not surprised with an unexpected bill. In an effort to help, we’ve compiled a few helpful tips from our techs to consider when you’re carefully composing those annual budgets:

Consider a subscription based software option

One of the first things businesses cuts when trying to save money is updating software, like Microsoft Office or QuickBooks.

This decision can directly affect productivity. Suddenly employees are spending more time trying to fix software issues than actually working.

By relying on an outdated version of your line of business software, after a while you start to run into compatibility issues, and eventually companies will stop offering support altogether.

In the last couple of years software companies have begun switching over to a subscription based service model versus a one-time software purchase. Rather than buying new software every few years, a business pays a much smaller monthly fee, but will always have the most up-to-date version of that software. You can add and remove licenses as needed and never worry about a substantial upgrading expense.

This model is highly recommended, it eliminates any issues with old software as well as regulates your costs. You know exactly what you’ll spend on software every year, with no surprises.

For anything you can’t get on a subscription based software, consider updating to the newest version every three years or so.

You always get what you pay for

We're always seeing business trying to bend the rules, such as using one Windows license for all your computers, using makeshift wiring, or purchasing knock-off brands of popular tools claiming to deliver the same quality as the main players. Typically, it won't pay off.

The pressure to stay under budget is understood, but consider the pros and cons with every IT decision: lost budget dollars versus lost productivity dollars. How much money are your “free” workarounds going to cost you long term? And is it viable to teach these risky procedures to new employees? Eventually a temporary fix will break, and probably cost more in the long run.

Investing in the right solution versus the “good enough” solution will always pay for itself.

Plan for large expenses and cut them into more manageable segments.

Businesses run into problems with excessive IT expenses when trying to postpone the inevitable.

Some argue that holding onto dated tech and software are “getting their money’s worth,” but are they really?

An older computer, even just 5 or 6 years old, is going to have noticeable performance differences compared to a newer model. And when your computer doesn’t perform, the money “saved” by not upgrading goes straight into lost productivity and IT bills for patchworks fixes that are really just duct tape over the hole in the dam. Eventually, no matter how hard you fight it, that computer will have to be replaced and if it’s an emergency situation it will end up costing even more. We all know how expensive it gets when tech goes down.

When you accept the inevitable you can plan for it.

How? Get your equipment purchases on a replacement cycle. Carve out space in your budget to replace 25% of your computers every year. After four years, those initial computers you replaced will be due for an upgrade.

The trick is consistently budgeting for theses upgrades every year. If you start putting it off, you’ll have a huge equipment replacement expense that hits your bottom dollar hard, all at once or worse, at a time that you can’t cover the cost. Making it a priority in your planning will make it less of catastrophe later.

Don’t skimp on the monitors. Companies will sometimes replace the computer but not the monitor in an attempt to save some money, but new higher resolution monitors mean less eye fatigue for your employees and higher productivity.

Think long term

When faced with a huge upfront cost, it’s tempting for a company to jump toward the cheapest option, but it won’t typically pay off long term.

This is often noticeable when working on big projects like new construction or major upgrades; as the price tag starts adding up businesses start tightening resources.

VoIP phones are a great example of this. Making the switch to an internet based phone system can mean buying all new phones and software. It can be a hard one to justify for a business when you already have a functional phone system, but often that switch cuts your phone bill by about half. If the month-to-month savings are substantial enough, it could easily be worth taking the hit now, to save in the long-term.

Have questions about how you can optimize your IT budget? Drop us an email.

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