HOW TO PLAN YOUR IT UPGRADE BUDGET
Everyone pays for IT upgrades eventually. It’s just a question of when and how. You can either plan for a fixed IT cost, or surprise your CFO with a capital budget item to cover an IT disaster.
With reactive IT spending, a typical scenario goes something like this:
Your department’s operating system lags one or two versions behind the current. The latest software patch for your mission-critical application turns out to be completely incompatible with your operating system.
So the update crashes the network, and business grinds to a screeching halt. Suddenly your IT budget is, “I need this fixed, and I don’t care how much this costs.”
Trade that off against planned, incremental IT costs.
If you schedule IT as a budget item, you have fixed costs. If you don’t plan, then the cost is unknowable. To make matters worse, you will probably have expensive downtime and delays added to the price tag. The pace of change accelerates, so the pain (and cost) of standing still accelerates as time goes on.
Plan your upgrade cycle to replace 20-25% of your equipment each year. These incremental upgrades help you keep IT costs under control with less downtime and fewer interruptions. This way, you won’t be left at the mercy of a vendor’s whims as they stop supporting old software.
Don’t put yourself in a position where a software update can put you out of business. At the end of the day, you must weigh lost opportunities and decreased productivity against IT upgrade costs.
Planning for upgrades lets you take control of own destiny. You can provide technology solutions that truly benefit the business, rather than putting out the latest fire. Pro-active planning can also help you avoid costly mistakes.
Strive for accuracy. Get granular with the details to make sure all costs are captured (training, maintenance agreements. Check your budget for last year and see how close your projections matched actual expenses.
Be as realistic as possible. Avoid projecting too high to cover errors or lack of proper planning. On the other hand, don’t lower projections to show your department’s value. This still holds true even if your senior manager doesn’t understand IT, and relentlessly focuses on cutting costs. You need to be honest about the correct level of spending required to maintain productivity.
Budget for the unexpected. Look at historic trends to set aside a reasonable amount for unplanned expenses. Even the best plans need room for Murphy’s Law.
Check in with other departments. Business direction can change quickly in this economy. Discussions you know nothing about can alter strategic goals, requiring you need to shift your budget accordingly.
Ready to get your IT spending under control? Call SIG today: 918-227-9800.