IT Budgeting Guide and 2020 Trends
By Corey Shields on May 18, 2020

IT Budgeting Guide and 2020 Trends

For your business to survive and thrive, it’s essential to stay up-to-date on modern technology. After the recent business disruption, it's become even more important to figure out how to get back on track in the most efficient way possible - and the right technology can definitely help you do this. 

Many businesses are taking stock of what technology they have in place right now, and what they will need for a successful recovery. Your business model might look quite a bit different moving forward, so now is the time to figure out what worked, what didn't, and what you should invest in.

That's just one reason why forward-thinking companies are enlisting the help of an IT consultant, who can help with both your short and long term IT strategy, and the IT budget you will need to accomplish your goals in 2020 and beyond.

Beyond a one time consultation, some businesses are opting to outsource part or all of ongoing IT service and support to a Managed IT Service Provider (MSP) so that they can hyper-focus on building their business back up, without having to constantly deal with IT challenges. 

A good MSP can help you boost business efficiency, increase IT security, and get this, can even reduce overall Information Technology costs.

You might be thinking, how can spending a monthly fee on an IT service plan reduce the overall IT budget? A very common misconception is that hiring a reputable provider has to break the bank.

But the facts are that by investing in an effective IT service provider, it’s possible to significantly cut costs and reign in your IT budget.

 

Reign Budget List

 

The Three Most Common IT Expenses

Before getting into the money-saving details, it’s important to have a general understanding of the most common IT expenses. There are three main categories for how your company spends money on technology: hardware, software, and IT support/emergencies.

1. Hardware Purchasing & Maintenance

Every organization needs many devices to accomplish their day-to-day tasks and big picture projects. This includes desktops, laptops, tablets, smartphones, servers, routers, firewalls - the list could go on and on.

Not only is it important to factor in the initial cost of your company’s hardware, but also the routine maintenance that it requires.

You’ll also need to consider hardware replacement costs; the current industry standards state that laptops, desktops, and servers should be replaced every 3 to 5 years.

 

2. Software Licensing & Renewal

IT Budget TroubleFor software expenses, add up what you’re currently spending on your software licenses and renewals - like Office 365 tools and antivirus protection - as well as any software you anticipate using in the future.

Be sure to take into account the monthly renewal fees for ongoing software subscriptions. 

Something you may not realize is that 80% of IT costs come after the initial purchase, so determining how much you spend on software purchases isn’t always easy.

The best way to get a clear picture of your software (and hardware) spending is to pull invoices, purchase orders, and records over the past 3 years and tally it all up.

 

3. IT Support & Emergencies

Dealing with unexpected but urgent IT projects or putting out IT fires - which often arise after a system failure or cyber attack - is a major aspect of any IT department, and it’s extremely important to set aside a budget for this.

If you're not under the care of an MSP, you’ll need to account for enough internal IT staff to handle these unexpected issues.

 

Keep in mind that these three items are just the main categories of your IT budget. The real list of IT expenses can be long, depending on your business needs.

 

What is IT Budgeting?

Now that we've covered the main expenses your IT department will incur, let's talk about budgeting. IT budgeting is simply making a financial plan for your tech needs and expenses. This includes hardware, software, maintenance, and staff.

 

Why is IT Budgeting Important?

IT budgeting allows you to forecast your expected costs for year. This allows you to see areas where you may be spending too much, and how your annual actual budget lined up with your predicted totals from the beginning of the year. Don't forget to allow some room in the budget for incidentals and emergencies!

 

What IT Budget Trends Are There in 2020?

Thanks to the global pandemic, almost every industry is seeing budget reductions across the board. However, be careful what you cut when it comes to your technology.

You should see which of your current IT services are the most and least valuable. If you have trouble getting everyone to agree, consider hiring a third party consultant to see where you can afford to cut back - and where you should not.

A good example of where you should NOT cut back is on cyber security.  Unfortunately, cyber attacks have shot up dramatically since the start of the pandemic - don't leave your business data at risk to save a few dollars in the short-term.

 

How an IT Service Provider Can Help You Save on Your IT Budge

Let's take a look at a few of the most popular ways an MSP can save you money!

1. Save Money With IT Automation

Many IT maintenance functions can be automated using software applications and systems, reducing the cost associated with ongoing repetitive work performed by IT staff. In fact, one study has found that IT automation can lead to a 66% cost reduction.

Some of the IT tasks that can be automated include job scheduling, system monitoring, patching, service provisioning and configuration, and application service delivery.

 

IT Automation to Save IT Budget

 

2. Save Money Through Virtualization and a Software Audit

One of the most obvious ways that an IT service provider helps companies to save is through virtualization.

When it comes to enterprise cloud usage, Forbes says that “77% of enterprises have at least one application or a portion of their enterprise computing infrastructure in the cloud.” The rate of cloud computing continues to rise, and soon it will reach 100%.

A company can save simply by switching out on-premise applications for more affordable (and more user-friendly) cloud apps. There's absolutely no reason to install a CD-Rom version of Microsoft when the cloud-based Office365 is available. In addition to Office365, here are a few of our favorite cloud apps for businesses:

  • Adobe Creative Cloud
  • QuickBooks Online
  • Slack
  • Asana
  • Google Drive

IT service providers help major enterprises and small business owners to make a smooth transition into a cloud-based business model, all while saving money in the process.

Another major area for money savings is through software audits. Maybe you’ve already switched to cloud services, but you bought the licenses in bulk, and forgot to remove them as jobs and necessary users shifted.

With software audits, you can be sure that every license you’re paying for is being used to its full capacity. Don’t throw away money on applications and licenses you don’t need.

 

3. Save Money With vCIO Expertise

A vCIO, or virtual Chief Information Officer, works to formulate a company’s IT goals, then develops a strategy and a budget to make those goals happen. This individual can help to manage your day-to-day tech initiatives and even rebuild and improve your overall infrastructure, saving you money in the long run.

Using vCIO services on an as-needed basis can help keep your business operations secure, ensure that your company is meeting compliance regulations, and optimize the costs of your current IT environment. All in all, a vCIO’s expertise can be a valuable asset to your business, especially when it comes to optimizing your IT  budget.

 

Still wondering how your IT service provider can save you money in the long run? Get in touch for more info on how to save through reliable IT service and support.


 

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