Tuscon Managed Services

Your 2021 IT Budget: What to Buy and What to Skip

For an IT service provider and an SMB owner, 2020’s been an absolute roller coaster ride. On the one hand, with 64% of the U.S. workforce working from home, there are immense opportunities right in front of us. It’s been exciting to help businesses leverage technology to work more efficiently from home. However, it has been a challenge to reorient their IT budgets to accommodate that flexible workforce. Reviewing 2021 priorities can help you prepare for an ever changing, more mobile workforce.

What does that mean? What do you need to keep in your budget and what do you need to cut out? In this blog, we’ll discuss what you need to optimize your 2021 technology budget. I will be going more in depth on this in a webinar on September 15. Sign up today for even more ways you can trim the fat for an effective IT plan in uncertain times.

1. Effective IT Budgeting: It’s a Lot Like Effective Financial Planning

Before we dive into what goes into your IT budget, let’s spend some time talking about how to think about it. Your IT budget is a significant part of your overall spend. That means it’s a good idea to think about it in terms of your financial planning. What does this actually mean?

What should you think about when budgeting for IT?

First, you’ll want to be clear on both your short- and long-term IT planning goals. How well does your IT budget enable them? Second, look at your IT budget from a risk appetite perspective. What’s your risk tolerance? If you have a conservative risk appetite, for instance, you might want to focus your budget on ways to ensure continuity for your current IT systems. Last, consider your cash reserves. What can you realistically budget for IT? What are the IT processes that are core to your business functions and what are things you could live without? What’s your cash flow position like and what kind of IT investment can you make right now? Taking these factors into account will help you get a clear, big-picture understanding of your IT budgeting strategy.

2. What Are Others Spending?

IT budgets vary a lot across industries. In the finance industry, 3 out of 4 businesses spend as much as 11.4% of their revenue on IT. On the other hand, 1 in 4 in retail businesses spend just 1.2% - barely a tenth of what finance businesses spend. Knowing what others are spending in dollar terms is a good starting point. What’s even better is knowing how that budget’s broken down. You might treat the IT budget as one big aggregate of all your computer and internet-related expenses. However, I like to break budgets into 3 key components: operating items, build and grow items, and transform items.

 Operate, build, transform: the 3 keys to IT budgeting

Operating items are mission critical. I’m talking about key software updates, IT admin costs, server replacements and other need-to-have expenses. These are the things that always need to be prioritized. If you cut into these expenses, you might significantly increase risk across your business.

Build items build on top of your current operational capabilities. The build items on your IT budget directly relate to your overall strategy. They’re the IT foundation on which your goals for next year are built. These are high priority since they have a significant impact on your organization’s long-term competitiveness.

Transform items are long-term strategic IT assets. These include budget expenditure on completely new processes, new products and services or new technologies. Transform items dictate where you see your business heading in the next 5 years. It’s important to balance commitments to these items with operational and build priorities.

 3. The IT Budget Items I Want to Make Sure You’re Prioritizing in 2021

While solid IT budgeting advice is always useful, this year’s a bit different. In today’s uncertain environment, with so many working from home, there are a few specific items that need to make their way to your IT budget. Let’s take a look.

Multi-factor authentication

When your workforce is remote, guaranteeing security is big problem. MFA (multi-factor authentication) is a simple, cost-effective step that can bolster security even when most of your workforce is remote. MFA adds authentication factors on top of a user password. This means that even if login credentials are compromised, hackers will have a tough time getting to your data.

 Microsoft Intune

Intune is a powerful MDM (mobile device management) solution. It controls access and how users use devices like laptops and smartphones. Intune lets you restrict access, set policies and isolate confidential data. With so many users working remotely, you’ll want to budget for Intune to make sure that you’re, well, in tune with access and device security.

End user security training

In today’s environment, human error is a massive risk factor. Minimize human error and you cut down the possibility of catastrophic security incidents. There are great security training services available with automation and customization for your industry and IT environment. You’ll want to budget time and resources for the actual training. This will ensure that your staff are that much more prepared when faced with a potential security incident.

Hardware as a service

It’d be nice if everything could be in the cloud. But not all applications are ready for the cloud – and you’ll still need Wi-Fi or switches to connect your devices. The standard approach is to buy and set up hardware based on your current needs. However, in an increasingly uncertain environment, there’s no guarantee that your actual hardware requirements will stay constant and deliver a return on that major capital investment.

This is where hardware-as-a-service comes into the picture. I’d like you to take a look at your hardware budget this year and identify possibilities for HaaS and hardware rental. This gives you greater flexibility and helps you save in the medium term.

 4. Beware of Budgeting Challenges

If IT budgeting was easy, you could just follow these steps, and then call it a day. Unfortunately, that’s not the case. You will have to deal with hurdles along the way. I want to take you through a few of them and what you can do to mitigate the impact.

 Break the stalled project cycle

It can be hard to perfectly align your IT budget with your long-term goals. Sometimes, this means that you don’t allocate enough for an IT project to deliver results within the expected time frame. What happens then? A lot of the time, decision makers forget about initial issues with allocation and decide to cut project spending, which can lead to even more stalling. Sometimes, spending less means spending more. If you have an IT project that’s been stuck on the back burner, re-prioritize it, especially if it’s a key build or transform item. Don’t wait to get it done.

 Bring IT to the big table

Another big reason I’ve seen businesses struggle with IT budgeting is that they still treat IT like a secondary function. Right now, in 2020, just about every key business process is underpinned by your IT infrastructure. That means the IT budget needs to be a key agenda item for senior management. You need to have a vision and an action plan for your IT, then follow through. An ad hoc approach will cost more and usually deliver worse results.

Spend your IT budget the right way

There are so many IT solutions out there for businesses. That’s great for flexibility, but it’s also a challenge if you don’t know what you’re buying, you can blow your IT budget on solutions that don’t add value to your business at all or even make life harder for you. It’s important to listen to technical advice before making any IT spending decisions. At Silverado, I walk clients through how our IT solutions solve their actual business problems. When you know this, you know exactly what you’re spending your IT budget on, and you’re putting it to good use.

Where Do We Go from Here?

Here’s the key takeaway from this blog: There are a lot of things that go into IT budgeting. You’ll need to carefully balance business priorities, operational functions and your vision to budget the perfect amount for your IT department. If you want the real lowdown, sign up for our webinar on September 15. I’ll be walking you through everything you need to know about effective IT budgeting and planning. Want to take action right now? Reach out to Silverado at (520) 903-1580. We’ll perform a free assessment of your IT environment. Let’s chat!


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