A good IT budget should help drive the business forward, support team development and leave room for the unplanned. As every business is unique, there’s no foolproof IT plan to follow, so the best advice I can give you is to take in lots of ideas and hand-pick the ones that make most sense for your business.

The approach to IT budgeting

How you approach your IT budget will depend largely on who you work for. If you are the CIO of a multinational and your annual budget figure looks a little like a phone number, your operational costs are likely to be much higher and there may be more room for technical innovation and challenger thinking.

On the flip side, if you’re managing a budget for a small business or owner-managed agency, your budget will be more modest and education and justification will be important if you want to bring them on the IT journey with you and get buy in for the projects that will help drive the business forward.

Either way, if you expect to be asked ‘why?’ at the end of every section of your budget spreadsheet and prepare strong rationale in advance, one of the things a great IT manager needs to do is know how best to make your approach. It can prove a great sense check for you and give you everything you need to present your plan for approval.

It’s unlikely you’ll get everything you ask for, so you should prioritise the big asks, or at the very least, have a pared back plan you’d be happy to run with as a compromise.

With all of that in mind, here are my top tips for keeping your budget on track and creating a template or formula you can tweak and roll out easily year-on-year.

  1. Track spend as you go

It’s the only sure way to know what you’ve spent and how much you’ve got left. You want to be on top of your game if someone asks where you are against budget and stockpiling invoices is only going to give you a headache down the track, when you’re less likely to remember the details of what was spent and why.

  1. Categorise how you’re spending

That way you can be very clear about how your budget is split across the things you’re expected to deliver and how much is left after ‘business as usual’ is taken care of. The clarity will be invaluable when you come to forecast for the next year.

Examples include:

Recurring operational costs; Software; Hardware; Licensing; Hosting; Assurance; Vendor fees or retainers; Approved project spend; New/Test & learn initiatives; Contractors and agency fees; Staff training and development; Unplanned purchases; New equipment (printers, laptops, mobiles); Contingency

  1. Knowing when costs will be incurred is a close second to knowing how much they will amount to, so it’s important that reminders give you plenty of notice for things that come up periodically. Things such as contract renewal and licensing fees, even subscription costs for publications used by the team should be included, so nothing comes as a surprise at the end of the year when you need the spreadsheet columns to add up.   Calendar important dates
  1. Review your biggest costs regularly

How much you pay vendors, contractors, agencies, third-party providers and outsourced IT on an annual basis is a good place to start. They’ll account for a large portion of your budget, so you should leverage rolling contracts and the loyalty you’ve shown them, to help you get the best possible price.

If they offer no wriggle room, you should think about shopping around or going out to tender, if you feel you can get better value elsewhere.

It’s also advisable to assess whether a CapEx or OpEx form of IT support will work best for you.

  1. Look at whether SaaS offers money-saving opportunities

It won’t always be possible to replace people or expertise with software, but if you can and the business or service in question doesn’t suffer as a result, it’s worth considering. It might even work as leverage if you’re negotiating with a service provider who could theoretically be replaced.

Similarly, if you’re using valuable team resources to do things software or budget-sensitive tools could automate or deliver in a fraction of the time, make the change. The more resources you have available in-house, the less you have to pay for externally, so use your people and their time well.

  1. Plan for disaster

Don’t present a budget for sign off with every penny tied up or attributed to approved projects. It’s the things you don’t plan for that can decimate the best laid plans. Alongside your business continuity plan, a disaster fund should sit outside your standard budget and allow for things such as emergency hardware replacement or the processes that will get you back up and running after a cyber-attack.

  1. Review your budget quarterly

Confidence comes from understanding how your budget is broken down and knowing exactly how to respond when you’re asked how things are going.

It’s a good idea to share updates on IT spend that’s producing results and be honest about lessons learned if you’re disappointed with a product or service you’ve invested in. You should also review any IT support from an IT consultancy to assess their performance. Providing that level of visibility and accountability will instil confidence and trust in your ability and leave less room for interference.

  1. Involve key people

The budget might be your baby, but people across the business will be able to offer insights you’re not privy to, and the more buy-in you have from the business in general, the more support you’re likely to get when it comes to collaborative projects.

  1. Tool up

Your team will be responsible for supporting all other business units, so it’s important you have the software, hardware, vendors, third-party services and off-site support you need to keep the show on the road and to stick to your IT roadmap. That includes regular upgrades and patches – anything that keeps you technically fit as a resource and needs to be covered by your budget.

  1. Include team development

Technology is constantly evolving and it’s important to keep up with IT trends, so employee training is an ongoing project and needs to be budgeted for. Having resources and offering time-out for employees to develop their skills is important for recruitment and retention. And, if the adage ‘You’re only as good as your team’ is anything to go by, you’ll want to be able to offer a decent training package when it comes to hiring experience and knowledge for your team.  

Learn how an IT consultancy can help your business grow by downloading our eBook on The Role Of IT In Your Growing Agency:


  • Email