IT Budget Guidelines
Thought Leadership

Budgeting for IT within your Business

By Paul Williams, Director

For business owners and management teams, each year brings a period of financial budgeting.  The IT component will be an integral part of the overall budget for the coming year, regardless of the size of business. From a technology perspective, what should you consider?  Don’t simply copy last year’s budget – especially if that was just a cut-and-paste taken from the year before.  Spend time thinking about your IT estate to identify risks and plan to invest in a way that makes sense. This will give your budget, and business, best value for every penny spent.

To budget effectively, you’ll need a clear understanding of your business objectives over the coming year. Upcoming project costs associated with business change will need consideration alongside normal day-to-day expenditure. You’ll also need to know about the devices and software in use within your business.  An up-to-date inventory, detailing hardware and software in use, with warranty expiry dates will help you plan effectively.  The key factors to consider are –

  • The risk and potential cost of vulnerabilities being exploited through use of old, unsupported and un-patched software
  • The impact of extended downtime through hardware failure

Hardware

The goal is to budget to keep your user’s devices secure and running at optimum performance.  For most businesses, a reasonable Windows PC should provide good service for three to five years, so base your replacement program on this.  Tech progression is relentless and although older PCs may still be workable, inevitably users will have some productivity issues.  As time goes on, risk of failure also increases the chances of unexpected downtime.

Refresh Cadence

Don’t budget to replace hardware only when it fails.  Businesses can become very inefficient when replacing devices one-by-one, over a prolonged period.  Not only does this cost more (multiple site visits, missed opportunity for volume discounts) but specification and configuration of devices can become quite random.  Maintaining a standardised approach reduces the overall cost of supporting and securing your devices. This means ensuring your users are using the same device model, with the same configuration.

With a planned refresh cadence, you can budget for partial replacement annually – perhaps a fifth or third of your estate each year.  If you establish this rhythm you’ll find unexpected costs and downtime due to failed PCs are minimised. It’s much more efficient than repairing failed devices on an ad-hoc basis, outside of warranty.

Servers

Server hardware can provide service for longer than client PCs, a five year refresh policy being usual.  You can extend your budget and prolong the life of new servers with good initial planning. Upgrades to storage or RAM can be undertaken cost effectively, prolonging life.  It’s key to maintain your hardware warranties to ensure failures can be repaired quickly. 

Budget for adequate hardware resilience within servers to avoid downtime. You can hot-swap many critical components without taking services offline. If you run an older server without warranty cover, you risk failed components or engineering skills being unavailable.  Even if you can get the parts and skills you need, you’re at the mercy of your supplier from a cost perspective.  Even worse, this could be happening slowly whilst business systems are down. Avoid having to deal with this type of fire drill.

Software

Your business applications need to be licensed, either through cloud subscriptions, annual recurring billing or by buying outright.  Check renewal dates of software subscriptions.  If your licensing is perpetual allowing indefinite usage, check you have ongoing vendor supports to ensure eligibility for future updates and patches.  Running software with known un-patched vulnerabilities is akin to lighting up a cigarette whilst standing near the fuel tanks, especially now we’re doing business in this ever-connected world.

As well as the obvious software packages used day-in and day-out, consider the back office packages used to keep your systems running – performance monitoring and alerting tools, security systems, building control solutions, etc.  Any of these maybe critical to the smooth running of your business and focusing on the detail at this budgeting stage may well avoid a future disaster. Make sure you budget for replacement and updates to your critical software packages.

Cloud Services

Many software packages are provided as month-to-month subscriptions these days (for example Microsoft 365).  Traditionally you may have bought software outright, using it for as long as possible to extract maximum value.  This approach may not be appropriate any longer for your business given the ‘always-connected’ nature of technology in the modern world.  Applications and online services need to be up-to-date constantly to ensure any vulnerabilities detected are patched by the vendor.  A benefit to the subscription approach is it’s flexibility – not only can businesses be confident they’re running the most up-to-date and secure versions of software, they only need pay for exactly what they need.  You can accommodate seasonal fluctuations and business changes efficiently by adjusting the subscription count on a month-to-month basis.  Businesses which have plans to expand or otherwise change in the coming year should build the cost implications into their technology budget.

Network Infrastructure

Traditionally, networking infrastructure has been installed and utilised for far longer periods of time.  It’s not uncommon to see 9 or 10 year old network switches still in production.  As gigabit network speeds to user desktops has been the norm now form over a decade, its not this performance which has driven hardware update.  Predominantly, advancements in manageability and security have been the catalyst for upgrade. Older network hardware can leave businesses exposed to some types of risk.

The wireless network landscape has evolved far more quickly. Use of WiFi devices five or six years old could mean running a couple of iterations behind the current standard, limiting speed and security.  The current move to WiFi 6 standards will improve performance in future by accommodating the exponential growth in connected devices we’ll continue to see in the coming years.

Security

The days of being able to purchase a single piece of hardware, or anti-virus subscription to protect your business have long gone. Given the need to work from various locations (including home) and the interactions your users have with online services each and every day, security needs to be at the forefront of your mind. The security of all your systems should be under continuous review. We do this for our customers as part of an agreed service plan, reviewing threats and best practice associated with their systems. Added to the costs of this type of service, budget for security awareness training for all your staff. If his focus lies elsewhere, it’s Fred in your Accounts department who could be your weakest link. When he clicks on the link in one of the few malicious emails to creep through your defenses.

Support Services

Whether you use an in-house IT team or utilise a third-party, allocate budget to ensure this resource covers your requirements.  Consider the value proper management of your IT environment brings, as opposed to lower cost ‘if it breaks, we’ll try to fix it’-type contracts.  Business technology very much appreciates routine maintenance and monitoring.  Unplanned failures can cost dearly, both from a financial and reputational perspective. A significant security breach or operational outage will dwarf the cost of the professional levels of day to day care it takes to maintain a secure and reliable environment.  Having a team, or partner, you can trust is invaluable.

In addition, other associated costs can creep in.  You can predict some of these – SSL certificate and domain subscription costs, staff security awareness training and Wi-Fi coverage surveys, for example.  Others are more difficult to predict and despite great planning you should allow for a contingency fund. 

Consider reviewing tech expenditure over previous years.  Costs which came as a surprise previously should creep into your budget as planned expense in future.  Better to learn the lessons of past mistakes!  Also consider technology as a business enabler.  Making use of Artificial Intelligence, or advances in manufacturing technology could well transform your business, putting it ahead of its competitors.  Is there a technology-focused project which you could budget to complete this year?

How can we help?

At Highstream we strive to be a trusted partner for our clients.  We put their requirements and best value first, at every interaction.  We hate surprises as much as you do – especially when in the form of business interruption or unexpected cost.  We’d be delighted to work with you to identify your technology expenditure and establish a budget and plan to ensure you get best value, not just over this coming year but into the future.  Having manged technology for large businesses for many years, our team can help identify hidden risks, helping steer you away from these and onto a safe path.  Let us help you focus on your core business, minimising the noise associated with IT.  Get in touch if you’d like to find out more.