An IT budget can be used as a device to generate innovation, with the objective of providing both tactical IT and the type of technology services that generate major digital transformation.
Consider the following IT uncommon budgeting tips that could deliver big results for your organization.
Use industry benchmarks
For a budget proposal to be effective, it must be easily understood by those with decision-making power. Using industry benchmarks is an effective way to communicate where and how your company should be funding IT.
Start your budget with essential KTLO (keep the lights on spending), and then move onto areas for improvement. Next, research reports on optimal budgeting for businesses based on size and industry. These reports can identify benchmarks for your budget, putting your proposed spending into perspective.
Once decision-makers understand how your budget compares to industry standards, they are much more likely to understand your strategic spending proposals.
As IT’s objective changed from sustaining infrastructure to providing the technology that facilitates strategic campaigns, the line has blurred between capital spending and the regular operating budget. As a result, businesses can postpone the realization of those expenses, an appealing opportunity for the company’s stakeholders.
Your budget can capitalize the funds spent on establishing valuable applications in addition to improvements and additions to established software. However, you ought to work with financial experts to make certain these choices meet accounting rules.
Move some IT spending to business units
A recent report by International Data Corp. indicated business divisions are increasingly spending more on IT. In fact, the report projected that line-of-business tech spending is going to be approximately comparable to that of a whole tech organization by the end of the decade.
Because other business units are spending more on tech, IT management should push for these units to place more of the technology spending under their own budgets. Even though the money eventually comes from the same company, IT leaders with various units taking on their share of the technology budget often see more successful IT campaigns.
The company executives who integrate IT spending within their own budgets have more motivation to ensure those investments are worth it. Consequently, they tend to work more intently with the IT team to create essential performance indicators and to gauge against those KPIs. They are more inspired to modify projects when they’re not meeting supposed targets, which in turn results in better outcomes and greater ROIs.
Plan for the future
IT spending should represent more than just needs for the upcoming year. It must also support a vision for the next three to five years. IT leaders can do that by making certain there’s money there for campaigns that set the foundation for the company’s future state.
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