How To Minimise The Impact Of IT Budget Cuts

By Mark Watson|24 October 2018

Planning your IT budget for the year ahead can be a juggling act. Everyone knows how important it is to have the right IT resources in place; but if budgets are getting tighter it can be difficult to achieve that.

As is the case with every budgeting process, finance directors need to understand the justifications behind planned spending. Maintaining current levels of funding involves showing what the ROI was for the previous year. If IT managers struggle to do that, they could lose resources to other departments and teams.

Budgets are a planning and communication tool. Knowing how to use them effectively achieves more than simply ensuring IT has the right resources in place for the year ahead. Here are a few ways an IT manager can plan for a better outcome from the budgeting process.

How To Plan An IT Budget

#1: Use last years’ as a benchmark

Most managers going through a budgeting process aim, as a minimum, to maintain the same level of resources as the previous year. It makes planning easier knowing how much you’ve got coming in. But it isn’t enough to ask and hope for the same amount. Getting what you need means looking at the impact of the previous years budget.

Say, for example, you’ve spent a year or two migrating services to cloud-providers. This should have generated sizeable savings; use this as part of the justification process. Map out where you’ve come from and what you want to achieve next, with the right resources.

#2: Highlight the ROI

IT teams - especially when you are working with a trusted external provider - should have a range of key performance indicators (KPIs). Let’s assume you’ve hit those: maintaining uptime at 99 to 95%, for example. Can you estimate the financial impact of it dropping below those levels? 

Keeping a business secure is another way an IT partner maintains uptime, further ensuring operational efficiency and reducing the risk of a cyber attack. Every action, every project has a financial upside and positive impact, which needs to be included in budgetary proposals. It’s also useful to include positive feedback from colleagues and managers, demonstrating the impact of the IT department across the organisation.

#3: Tell a story

Every line item in a budget should map back to your organisation’s IT strategy. Take cloud applications that facilitate remote working for example - why do you need it?

If you can demonstrate the productivity gains that these solutions deliver, it’s easier to justify then simply bundling every software subscription into the same line item.

An IT budget shouldn't be a wish list. It is a roadmap to demonstrate what you need to achieve the IT and operational goals for the year ahead. Those goals should have high-level support, to ensure nothing on the budget is a surprise for senior managers and stakeholders. Make sure, especially when asking for budgets for external partners and vendors, that managers understand the key role they play and how a trusted partner helps companies achieve their goals. 

#4: Don’t leave it until last minute

Next years budget should start when the budget for this year is approved. Carefully compare allocated resources against spending. Next, look at how resources could be re-allocated if prioritise have changed or you can invest the money more effectively. 

Use this years resource planning and actual spending to create a draft budget for the year ahead. Then compare that against investment objectives. It can also be useful to benchmark spending against external provider recommendations and IT departments in companies of a similar size.

Start selling your budget early on to managers and stakeholders who have an influence over what is agreed. Get as many agreements on spending as possible before the formal process begins, which should make it easier to get a budget approved.

#5: If cuts are necessary... 

Maybe revenue is down or other objectives have to take a priority - then aim to find ways to reduce costs without it having a serious impact on your strategic goals. If you can demonstrate the role IT can play, even when using a reduced allocation of resources, then it should be easier to prove - when funds aren't as tight - what you can achieve when budgets are larger again.

When asking for money for the year ahead, remember that it’s easier to get budgets approved based on past results, instead of future hopes. 

If you haven’t already outsourced 1st or 2nd line IT support, you could find that this simple step frees up budget to spend in other areas. IT outsourcing can be help ensure that budget and resources are available for in-house strategic IT projects, reducing the cost of what can be expensive operation functions when managed internally.

To find out more about outsourcing your IT support, get in touch with our team. Alternatively, you may like to download our guide to driving IT service desk efficiencies:

 

Further Information

How to drive IT Service Desk efficiencies

We explore how your business or organisation can streamline your IT support creating opportunities to make savings, reduce downtime and improve productivity, and focus your IT team’s resources on projects that will deliver positive ROI.

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