As the financial year draws to a close, many businesses will be considering their IT budgets for the next 12 months.
How much to spend, and where to spend it, are the two key questions that businesses will face.
Given the state of the economy in the last few years, some have been putting off major IT investments, trying to eke every last drop of value from their current systems.
That’s understandable, but it’s not a situation that can last forever. Technology cycles being what they are, money will soon need to be spent.
The good news is that today’s technologies require less capital to set up – something that can change the way you budget.
So how should your business approach the task?
When it comes to core investments, infrastructure is where it starts.
Whether it is in the cloud or on premise, your base infrastructure must be the first priority. If it isn’t performing, devote as much of your budget to it as required.
Only once a good infrastructure is in place should your focus shift to other areas.
Capital is a critical and limited resource. It makes sense to invest it in specific equipment and business projects, rather than sink too much of it into IT.
Therefore, today’s best IT budgets are geared towards operational expenses. Whether it’s infrastructure, CRM or disaster recovery, it’s now possible to incorporate almost all IT systems under the operational expenditure banner. Take advantage.
Ask your trusted vendor
When planning your IT budget, it’s important to think smartly about how you’re going to spend.
The right technologies can help to drive your business by making it more efficient and by improving customer service. Make sure that your search for them is comprehensive by asking open questions of your technology vendor. What new technologies are out there? What benefits can they bring to my business?
You should get some really interesting responses. From mobility to social media integration or custom applications, it’s possible that your business might not even be aware of technologies that can deliver the biggest benefits.
Remember that IT isn’t in and of itself a game changer, though it can be if used intelligently.
Prepare for a high-bandwidth future
Many don’t realise it, but the bandwidth you have access to affects the way you can do business – cloud being a case in point.
With the NBN on the way, Australian businesses will need to adjust in order to take advantage of what will soon be a high-bandwidth environment.
In addition to making use of cloud services, this also means budgeting for the development of online services – such as commerce solutions – that will allow your business to reach out to and engage with customers in new ways.
Your IT budget is an important part of your business spend: Build a budget that seeks to get the basics right before spending on other projects.
By emphasising OpEx, you’ll create a budget that will scale and adjust to your requirements as they change – helping to get your spending levels right while simultaneously reducing risk.
Dave Stevens is MD, Brennan IT.
(This blog post was first published on the SmartCompany website on May 24 2012)