6 IT budgeting best practices for businesses in 2023

6 IT budgeting best practices for businesses in 2023

As your business grows, you need to make sure you create clear, well-planned IT budgets. Otherwise, you may inadvertently stretch your company’s financial resources too thin.

To make a solid IT budget for 2023 and beyond, you need to adopt the following best practices:

1. Conduct an IT infrastructure audit

Start by taking inventory of all the software and hardware your organization has and list down their costs, licenses, warranties, patch dates, location, and vendor information. By doing so, you can properly budget for updates, replacements, and upgrades. For instance, the industry-standard life cycle of a laptop is three to four years. Knowing how old your company laptops are will help you decide when it's time to replace them. If you fail to budget for such scenarios, it could lead to costly downtime and decreased productivity.

2. Pinpoint your business’s IT issues

You need to determine whether your IT can adequately support your company's current and future requirements. This process will usually unearth problems in your IT systems and processes, which will highlight what tech-related expenses you need to prioritize.

Your business's IT issues may include the following:

  • Slow computers and other devices
  • Incompatible software and hardware
  • Unreliable internet connection
  • Lack of adequate IT support
  • Poor security posture
  • Noncompliance with regulations like PCI DSS and HIPAA

3. Align IT budget with business objectives

When budgeting for tech purchases, be guided by the company’s goals so you can better prioritize spending. For example, if cybercriminals are heavily targeting your industry, then you should allocate a huge portion of your IT budget to implementing next-generation firewalls, anti-malware software, intrusion detection and prevention systems, and other security measures.

Also, make sure your IT budget can support your company’s long-term objectives. For example, if you want to move toward a permanent remote work environment, then your tech budget should include strategic investments in cloud-based productivity apps, Voice over Internet Protocol systems, and a mobile device management solution.

4. Create an IT budget timeline

An IT budget timeline lays down the start and end dates of strategic investments so you'll know exactly when you'll incur certain expenses and you can make the adjustments to maintain a healthy cash flow. For instance, if you're planning to upgrade most of your hardware in the third quarter, then you may need to schedule other IT expenses in other quarters.

Try to avoid making the bulk of your IT investments at the start of the year. This way, your business will still have enough cash to cover any unexpected costs, such as expenses for repairing broken hardware or responding to a cyberattack, throughout the year.

5. Prepare contingency budgets

Things don't always go as planned, so you need to set aside a budget for unforeseen events. It should cover the cost of resolving service disruptions in case of any disaster, such as hardware failures, power outages, and data breaches. You must also allocate funds for creating business continuity and cybersecurity incident response plans. Doing so can save your company from downtime and bankruptcy.

6. Regularly review and adjust your budget

Over the course of a year, major business events may occur or new technologies may develop, and you may need to tweak your budget accordingly. Therefore, you must review your IT budget at least every quarter and make necessary changes, such as reallocating budgets from less successful initiatives.

Budgeting for IT can be daunting. Fortunately, you can turn to Founders Technology Group for help. With our outsourced CIO service, you can get all the benefits of a CIO at a fraction of the cost. Get in touch with us today.