Making your IT Budget go further in 2020
It's the start of the year, and for many firms it means budget review time. There are many components to a firm’s budget, and a lot to think about for the coming year.
One area of a firm’s budget which is frequently overlooked, or lacks a strategically planned review process is the IT area of the budget. There are many reasons for this, the primary being that most small and boutique firm's do not have an IT executive making significant contribution to the future budget requirements of the firm.
The by-product of this, is that many firms budget the minimum amounts required to maintain the operational capacity of the firm’s technology, such as computers, servers, phones, internet, printers, scanners, software, and of course the support and maintenance of this equipment.
There are a few consequences to having minimum budget to cover operational costs of technology infrastructure. I have listed some of these below;
- Technology expenditure is seen purely as a cost centre as it delivers no perceived value
- Budgets are commonly exceeded where unforeseen expenditures are incurred
- There is no scope for innovation and new technology
- Any new technology acquisition requires a lengthy process of procurement approval
- High value technology acquisition does NOT fall in to IT budget, enforcing the perception that IT is purely a cost centre
But, there are ways to overcome these challenges and it doesn’t require you going back to the business to request a larger IT budget.
Start by completing a review of IT expenditure, and breaking it down in to logical areas. An easy way to do this is to pull a report from your accounting system, preferably broken down by Account Code (Ledger Code or Sub Account Code), grouped by vendor, and with each transaction visible. This will provide you with granular transparency over your outgoings pertaining to your technology expenditure.
Now, identify vendors that provide the least value to the firm. The simplest way to determine value to the firm is to use the age-old mantra that if it doesn’t make you money or save you money, you shouldn’t be spending money on it. Remember, time is money, so factor this in to your analysis.
Once low value expenditures have been identified, it’s time to start trimming. Low value offerings are generally commoditised, and there is always room to make some savings without missing out on what this expenditure provides in return. Fixed fee managed IT services is a good example, whereby firms likely don’t use the inclusions of these contracts to their entirety, subsequently leaving space to save costs.
Those savings can be invested in to higher value technology and equipment that can provide better customer experience, simplify or automate repetitive tasks, or remove challenges and constraints identified by legal teams. It presents an opportunity to progress the firm technologically, and not be left behind as the digital revolution takes hold.
Maximising your IT budgets this year does not have to be complicated. With a little time, and a little insight, you will be able to deliver more, for less.