5 Key Factors for Setting an IT Budget

According to a worldwide survey conducted by CEB, 33% of organization's IT budget is going towards innovation and business opportunity. Not sure how you IT budget should be divvied up? You're not alone in this dilemma. Understanding the following 5 factors can aid in creating your IT budget and allow for a smooth, efficient process:

1. Past Performance

Identifying your existing trends is the first and most important step to creating your IT budget. Recognizing these trends will help you determine how well your IT budget has performed in the past. If performance suffered, then an increase may be in order. If performance met or exceeded goals, then reducing the budget could be an option as part of an overall plan for improving efficiency.

2. Current Infrastructure

Infrastructure size will significantly affect your budget. Line item allocation is another big difference between budgeting processes in large organizations and their smaller counterparts. A small or under-developed infrastructure will tend to prioritize upgrading and expansion in the IT budgeting process. A large, well-developed infrastructure, on the other hand, will prioritize maintenance, upkeep, and patching.

3. Business Size

Company size does matter when it comes to budgeting for IT. A good rule of thumb says that the larger the business, the more money that should be set aside for unexpected circumstances. A larger number of moving pieces in the technology infrastructure translates into an increased potential for things to go wrong. This also means that there is the potential for accruing bigger losses. Organizations should mitigate these risks by investing more into preventive security measures, such as data backups, redundant capacity, and virus prevention.

4. Business Maturity

Business maturity also plays a large role in determining your IT budget. Well-established organizations are much more likely to suffer larger damages if something goes wrong. This propensity should be accounted for when creating a budget. Mature companies will also have far fewer swings in their IT needs and can therefore make more conservative adjustments year after year. These firms should look for efficiencies in their current budgets. Younger companies, in contrast , should focus on expanding and building up their IT departments.

5. Business Growth

Keeping your IT department lean is essential to maximizing returns on any investment in technology. This often means having just enough capacity to meet current business goals, and a little bit of padding to ensure that IT never becomes a bottleneck. This also means that business growth will be a critical factor in setting an IT budget. Companies will need to set their goals for business growth before moving on to their IT considerations. Without the former, organizations will be able to accurately complete the latter.

Still not sure where to start with your IT budget due to changes in your network and IT environment? Contact CDN Technologies for an IT Assessment to help determine your next steps.