How to set your IT budget

Checklist

1. 1 Examine your spending in previous years. Even if you’ve not bothered with a formal IT budget before, this gives you an excellent baseline. You can also use your previous spending to check your final budget. If you’re budgeting much less than you spent in previous years, is your budget realistic?
2. 2 Remember: it’s just like any other budget. The techniques for setting budgets in general apply equally well to IT budgets. Apply the same principles and you won’t go far wrong.
3. 3 Define the scope of your budget. For instance, should it cover costs for IT staff and training, or do those items come from different budgets? If you don’t set these boundaries, you could end up budgeting for some items twice — and not at all for others.
4. 4 Talk to experts. It’s easy to overlook or underestimate IT spending in key areas like support and backups. If you already have a trusted IT supplier or support company, ask for their input. Talk to other small business owners about their IT budgets too.
5. 5 Calculate your hardware costs. How much does your existing IT equipment (PCs, laptops, servers etc.) cost to maintain each year? Regular maintenance is essential for smooth-running IT, so make sure you make adequate provision in your IT budget.
6. 6 Calculate your software and cloud costs. How much do you spend on your existing software each year? Remember to budget for any software or cloud services for which you pay a monthly fee.
7. 7 Consider further investment. As technology changes, new services or devices such as tablet computers may offer benefits. Look at costs carefully and factor in installation and maintenance fees. If you’re looking for bespoke systems, ensure you have contingency funds for extended testing and back-up procedures for any down periods.
8. 8 Don’t forget about routine upgrades. The typical lifespan of an office computer is three to five years. Make sure you’ve budgeted adequately for equipment and software that’s due to be upgraded. Some software packages and most cloud services include upgrades as part of a regular monthly cost.
9. 9 Think about business growth. If you intend to employ more people then your IT costs are likely to increase. You may also need to invest in additional storage as the volume of data held by your business grows.
10. 10 Research support costs. In some circumstances, keeping IT support in-house is better for your budget. However, smaller companies generally find an external support contract is more cost-effective. These start from around £1,000 a year.
11. 11 Set aside money for IT security. It’s important your business takes IT security seriously, so make sure there are funds specifically allocated to it. These should cover security software, backups and contingency funds for disaster recovery.
12. 12 Factor in training. Even a small investment in IT training can pay for itself in terms of increased productivity. In-house training is a cheap option, but offsite courses can cost as little as £500 for small groups. Shop around and don’t be afraid to haggle.
13. 13 Keep IT part of your business plan. Your IT systems should keep working even when you don’t. A top line monthly update allows you to spot potential problems and tweak budgets if necessary. A more in-depth review should be held once a year at the same time as your key business planning.

Cardinal rules