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CFO Tech Outlook | Wednesday, August 26, 2020
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IT budgets have become vital for securing funds for IT initiatives. This has increased the pressure on many organization leaders to develop a robust budget to fulfill the company’s IT requirements. This often makes the leaders succumb to the pressure and makes them tweak the previous year’s budget
FREMONT, CA: The budgeting season is almost here, and organizations will soon find themselves engaged in preparing annual budgets, with technology investments and overall IT budget influencing the planning process. IT budgeting is the process of allocating or securing money from a company’s overall budget to fund IT expenses and initiatives. An IT budget can include various recurring expenses like hardware or software investments to investments dedicated to increasing the end-users’ security awareness. As companies move towards a digital future, the IT budgets are likely to increase across various sectors. IT budgets have become vital for securing funds for IT initiatives. This has increased the pressure on many organization leaders to develop a robust budget to fulfill the company’s IT requirements. This often makes the leaders succumb to the pressure and makes them tweak the previous year’s budget. This is the first mistake that most leaders make while drafting an IT budget. A proper IT budget needs to be drafted after carefully assessing all the variables. Business leaders should look to craft a new strategy and roadmap to align with the organization’s strategic plan.
Here are some of the best practices for developing a healthy IT budget.
[vendor_logo_first]Revisit the Aging Assets
An inventory review is the best place to start a budget. Take stock of the PCs, printers, servers, virtual machines, phone systems, and other equipment sitting in storage. Identify which assets are approaching the end of their warranty period, how many need to be replaced, and whether these assets will substantially impact the budget. Communicate the message clearly after carefully identifying all these details.
Provide Start and End Dates
Start and end dates for investments in each item will help identify precisely when expenses will be incurred. It is always prudent to not overload the budget in the first quarter. A project initiated in the third quarter will always cost a fraction of a year-long project, and it will be easier to get approval.
Maintain a Working Copy of the Budget
The budgeting process should be conducted in the spirit of negotiation and compromise. Do not be wholly optimistic, and try to replace every asset. Carefully assess those that can be reused and replace only what is necessary. No business area, including IT, gets everything requested for. It’s important to know which items can be removed or postponed from the budget, if necessary.
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