{"id":55961,"date":"2021-11-03T13:00:00","date_gmt":"2021-11-03T17:00:00","guid":{"rendered":"https:\/\/jumpcloud.com\/?p=55961"},"modified":"2024-08-14T17:30:20","modified_gmt":"2024-08-14T21:30:20","slug":"it-budgeting-strategies","status":"publish","type":"post","link":"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies","title":{"rendered":"Budget Strategies for Your IT Department"},"content":{"rendered":"\n<p>IT administrators wear many hats: help desk hero, network engineer, database administrator, and even budget manager. Budgeting can be as simple as having a lunchtime conversation and using common sense if you\u2019re a small organization, or you may have an operations-driven CEO and growing employee roles. A budget, in any case, isn\u2019t an afterthought, and should reflect <a href=\"https:\/\/jumpcloud.com\/blog\/how-to-use-an-it-priority-matrix\">your priorities<\/a>. It\u2019s an opportunity to rationalize spending and make better decisions about IT resources and teams that also has a positive impact on the well-being and effectiveness of your staff.<\/p>\n\n\n\n<p>Chances are that your trade school or college programs didn\u2019t discuss this topic whatsoever: mine didn\u2019t, and I was a business major &#8230; go figure. You may not have had the interest or exposure to the budgeting process to be knowledgeable enough to apply it to strengthen your department\u2019s ability to execute. This article will transform budgeting from a mysterious, daunting <em>must<\/em> into an accessible, empowering process that will be useful and beneficial. Here are a few key takeaways that you\u2019ll learn:<\/p>\n\n\n\n<ul>\n<li>How to determine what drives your expenses and how to categorize them<\/li>\n\n\n\n<li>How to look at IT as a service provider, responding to demand and growth<\/li>\n\n\n\n<li>How to use support tickets as a currency to determine the technology solutions and people that you\u2019ll require<\/li>\n\n\n\n<li>How to assemble your data and appropriately budget given all of these factors<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-budgeting-fundamentals-opex-capex-and-how-to-determine-what-drives-expenses\">Budgeting Fundamentals: OPEX, CAPEX, and How to Determine What Drives Expenses<\/h2>\n\n\n\n<p>Let\u2019s begin by acknowledging that every line of business is different: i.e., a department that primarily responds to support tickets is headcount driven while there are other inputs for other departments, for example CDN programming in manufacturing. This article will emphasize headcount as its growth factor. Your initial tasks as an IT administrator will be to baseline what\u2019s presently being spent, the run rate over the budgeting period (after analyzing where and how your organization is growing and what support that requires), some real justification for spending all of the dough, and presenting a final budget from a level set once those pieces are in place. Establishing a baseline will rationalize where you are today prior to projecting any future requirements.<\/p>\n\n\n\n<p>Start by asking yourself some basic questions to baseline what you already have (and require).<\/p>\n\n\n\n<ul>\n<li>Who\u2019s using what?<\/li>\n\n\n\n<li>What support do they need (including equipment)?<\/li>\n\n\n\n<li>Do any of those things need to be replaced (now, in case of emergency, or periodically)?<\/li>\n<\/ul>\n\n\n\n<p>Then start to ask yourself what trend(s) will impact it the most.<\/p>\n\n\n\n<p>These trends are typically timebound, which means that you can establish a chronology of when you\u2019ll need things. For example, there will be a glaring contrast between how services and license renewals are paid for. Keep in mind that big, annual software renewals contribute to the cost of overhead and managing contracts. Those come out of the <em>capital expenditures (CAPEX) <\/em>budget, which is a major long-term expenditure versus <em>operating expenses (OPEX)<\/em>, the day-to-day operational budget. Accounting makes a distinction between software and services. Using services is a method for your organization to lower its income taxes and free up cash. Services may make it easier to budget when you already know what the ongoing costs will be.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-scrutinize-what-you-ve-been-spending\">Scrutinize What You\u2019ve Been Spending<\/h2>\n\n\n\n<p>Adopting services over software is one example of how budgeting could be streamlined. The foundational activity of analyzing spending trends year over year may also help to determine where there\u2019s potential budget savings that you could reallocate to newer company priorities.&nbsp;<\/p>\n\n\n\n<p>Be on the lookout for overspending and underspending. For example, you could be overspending on enhanced ERP support when training an internal resource would cost less, or underspending on transitioning to a Zero Trust security posture. Scrutiny<em> <\/em>doesn\u2019t necessarily mean more complexity; rather, it\u2019s a combination of applying the structure of baselining activities and then turning to the wisdom and insights that you\u2019ve accumulated throughout your career to make better decisions. \u201cThat\u2019s the way we\u2019ve always done it\u201d doesn\u2019t mean that it\u2019s the right way.<\/p>\n\n\n\n<p>Communication is paramount to getting the \u201clay of the land.\u201d A good IT administrator will take the time to understand how other departments work and what the business goals are. During my time as an IT Director I observed that some systems never obtained buy-in within certain departments and that we wasted our money while basic IT needs weren\u2019t serviced well enough. My shipping department was very good at estimating which carrier would cost the least based upon factors such as size, weight, and destination. They didn\u2019t need expensive shipping solutions, but a conversation with the team (and knowing how they worked) revealed that a simple wireless barcode scanner would save them a lot of time and increase productivity.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-it-is-a-service-provider-responding-to-demand\">IT Is a Service Provider, Responding to Demand<\/h2>\n\n\n\n<p>The next step involves getting from where you\u2019ve been to where you\u2019re going. You don\u2019t determine every business decision or where the company is focusing its resources; rather, it\u2019s your role to support areas of growth versus being viewed as a cost center. Growth determines where resources will go and will affect how your department functions and what it requires.<\/p>\n\n\n\n<p>There\u2019s no crystal ball and IT typically lacks full visibility and understanding of profit\/loss and income statements, but your organization\u2019s topline revenue goal is a good place to start mapping out demand for your services and support. Determine how your organization is going to meet that goal using inputs such as marketing and new product development, which will help to create a structured sequence of events. For example, new products may require more engineers and those engineers will need CAD licenses, laptops, and other line items specific to their role.<\/p>\n\n\n\n<p>More advanced budgets will align spending to the respective departments that IT services. IT enables everyone else to do their work more efficiently. You may be spoon fed hiring plans from finance along with growth plans to understand the departmental-level needs. Use this <a href=\"https:\/\/docs.google.com\/spreadsheets\/d\/1KAtQXHFAD-LvncQtLLcfVKpDL9ttf5RBGrpSEudnt7c\/edit?usp=sharing\">budget template<\/a> to tabulate those budget \u201casks.\u201d because each department head will have their own wish list.<\/p>\n\n\n\n<p>It\u2019s on you to envision what \u201cX\u201d number of new hires in other departments (and what the department heads are asking of you) next year means to your team. Support tickets are the resource that\u2019s at your disposal to break it all <em>down<\/em> into economic units. You can predetermine the level of support engineers will need and anticipate their needs. Different departments require different tools, which will help you to build <em>up<\/em> cost estimates. For instance, I knew that my new products required more off-site support and had an idea of who we were bringing on board next as well as a requirement to improve ERP efficiency. That knowledge drove investments in VoIP communications (to create a virtual call center), a CRM to record cases, and a near truckload of consultants to straighten out an ERP system that was never fully utilized and cobbled together over the years. IT drove business enablement, but didn\u2019t make the calls on corporate strategy.<\/p>\n\n\n\n<p>There\u2019s clear causality between what activities are happening elsewhere and how your department functions. The aforementioned support tickets are a factor in making budgeting decisions that will influence how smoothly IT functions and the impact it will have on your team.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-determining-whether-to-hire-more\">Determining Whether to Hire More<\/h2>\n\n\n\n<p>Get as granular as possible in your planning to accommodate the company\u2019s drive for morerevenue (or operations if you\u2019re a nonprofit). For example, know how your staff is spending its time, whether it\u2019s already overloaded with \u201casks,\u201d and what the impact of those demands is on your team members. You should know what a realistic ratio of staff to end user is, and figure out whether you\u2019ll need more people and tools to support the higher-level organizational goals.&nbsp;<\/p>\n\n\n\n<p>The volume of support tickets will help with those projections. Is your staff able to handle those tickets? How much time is being spent handling tickets versus enabling value-added projects? The number of tickets will correspond to rising headcount within the departments that you service and the current ratio of tickets per employee can be used to calculate whether to hire more.<\/p>\n\n\n\n<p>You should now have a general understanding of what you need in terms of people and technology to support your organization&#8217;s goals. Your baseline is going to change as you plan for what\u2019s next as accurately as possible. We\u2019ll now walk you through how that process works.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-calculating-new-fixed-costs\">Calculating <em>New<\/em> Fixed Costs<\/h2>\n\n\n\n<p>The next step toward completing your budget is to assemble your department\u2019s <em>new <\/em>fixed and ongoing operating expenses, given the growth projections, any IT hires, and present baseline level of spending. Hardware and software are typically some of the biggest line items.&nbsp;<\/p>\n\n\n\n<p>Some of those include:<\/p>\n\n\n\n<ul>\n<li>Wages<\/li>\n\n\n\n<li>Bonuses<\/li>\n\n\n\n<li>Benefits<\/li>\n\n\n\n<li>Cell phones<\/li>\n\n\n\n<li>Working meals<\/li>\n\n\n\n<li>Transportation<\/li>\n\n\n\n<li>Entertainment<\/li>\n\n\n\n<li>Training<\/li>\n\n\n\n<li>Cloud services and subscriptions<\/li>\n\n\n\n<li>Consultants<\/li>\n<\/ul>\n\n\n\n<p>Don\u2019t forget to account for employee and device churn as well as external partners. You may use historical information to project those numbers. There should be a list of assets and an aging schedule to know when to upgrade, replace, and securely dispose of outdated hardware.&nbsp;<\/p>\n\n\n\n<p>Improving the employee onboarding experience may rank as a high priority in a time when there\u2019s a lot of churn out in the workplace and it may be harder to attract and retain talent. Have a budget to maintain a stock of laptops; the new employee gets what\u2019s on the shelf and the <em>next<\/em> hire will receive a future PC that you order to replenish. The cadence of hiring will guide you, which may differ among your organization\u2019s departments. There\u2019s also many <em>known unknowns <\/em>to consider.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-nothing-is-absolute\">Nothing Is Absolute<\/h2>\n\n\n\n<p>It\u2019s my experience that accounting for inflation and rounding errors is important: have a built-in cushion in the form of a modest overestimation. You\u2019re not \u201ccheating,\u201d because people are historically terrible at estimating (even fixed expenses) and just as terrible at future-proofing. Ask yourself: <em>Is a budget what you know is going to happen or is it what you want to happen?<\/em> Having a plan is preferable to an allowance if your goal is to fund projects, and that\u2019s true even if you\u2019re an advisor such as an MSP. It\u2019s not your role to simply recommend \u201cstuff\u201d to buy.<\/p>\n\n\n\n<p>You might luck out if accounting has given you a template that leaves empty line items for you to address, but there\u2019s much more to budgeting than jockeying for an allowance. Your strategy and priorities should flow into your budget and rationalize your spending decisions. This will help to gain consensus about why investments and projects should be emphasized. You may also work within an organization that focuses on three to five year plans. It\u2019s your responsibility to effectively communicate IT\u2019s needs and avoid a variance between expectations and headcount.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-setting-it-s-new-priorities\">Setting IT\u2019s New Priorities<\/h2>\n\n\n\n<p>You\u2019ve been given marching orders and projected the expenses for various cross-functional \u201casks\u201d and goals, but that doesn\u2019t mean all of those will be funded (or performed simultaneously). You\u2019ll <em>always<\/em> have to decide which projects come first, new or old. A <a href=\"https:\/\/jumpcloud.com\/blog\/how-to-use-an-it-priority-matrix\">Priority Matrix<\/a> will establish flexible, systems-based decision making that\u2019s defensible and more palatable to the C-level, and may even help you say \u201cno\u201d to a particularly demanding department head whose team isn\u2019t as strategic over the upcoming budgeting period. There will always be broader trends that your executives (and investors) will decide must be addressed ASAP, and a Priority Matrix will help you manage and determine what comes first as those pop up unexpectedly.<\/p>\n\n\n\n<p>For example, meeting a corporate directive to enable work from anywhere (WFA) could be a vehicle to gain a greater slice of the budgeting pie for your department or additional resources when and if you need it. However, IT departments should always have a core strategy versus using tactics or being reactive, and that\u2019s where prioritization factors in: you\u2019re providing enablement to make work happen<sup>\u00ae<\/sup>. It\u2019s also important to comprehend the <a href=\"https:\/\/jumpcloud.com\/blog\/5-things-that-drive-c-level-it-purchase-decisions\">executive mindset<\/a> where modernization, automation, speed, cost-efficiency, and the employee experience drive more spending. Be proactive: data analysis in the form of an <a href=\"https:\/\/jumpcloud.com\/blog\/roi-jumpcloud\">ROI<\/a> statement\/spreadsheet can also identify strengths and weaknesses.<\/p>\n\n\n\n<p>It goes without saying that there are many stakeholders for projects, including any external partners and consultants involved with those implementations. They\u2019ll have an idea of what your budget \u201cshould be,\u201d which is another case to adopt a Priority Matrix. Don\u2019t make a wish list or just try to \u201ckeep the lights on\u201d: these aren\u2019t only <em>your<\/em> imperatives and essentials when IT should be one of the operational linchpins that enable the organization to succeed in its mission. Department heads will have their own pressing wants and needs, which the Priority Matrix will help you distill into a comprehensive plan that will give you a 30,000 foot vantage point.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-budgeting-is-time-well-spent\">Budgeting Is Time Well Spent<\/h2>\n\n\n\n<p>Budgeting isn\u2019t a last-minute endeavor, it\u2019s also an opportunity to highlight your performance, ensure that priorities are followed up on, and exhibit remarkable foresight into the activities you\u2019re undertaking and why your contributions are important. C-level managers would also benefit from retaining the right advisors for better fiscal planning.<\/p>\n\n\n\n<p>You can become a budgeting hero: a holistic view and roadmap of your priorities, with reference to the prior year\u2019s allocations, will help you sell your agenda, and gain a consensus behind it.<\/p>\n\n\n\n<p>Budgeting is more work and seems restrictive, but it\u2019s a core condition to execute (or not) your strategy in support of the broader organizational mission. That\u2019s really not the case if you view it in the appropriate context: validation of your priorities and strategy. Having systems in place will help to manage growth as your department faces new challenges and demands. It will also ensure that your successes are recognized throughout the organization and beyond.<\/p>\n\n\n\n<div class=\"promotion-banner-small is-flex-direction-column has-items-aligned-flex-start has-items-aligned-center-tablet\">\n    <div class=\"promo-small-image is-hidden-mobile\">\n        <img decoding=\"async\" src=\"https:\/\/jumpcloud.com\/wp-content\/uploads\/2021\/11\/money-bag-calculator-aspect-ratio-160-110.png\" alt=\"JumpCloud\">\n    <\/div>\n    <div class=\"promo-small-content\">\n        <p class=\"is-type-body-tiny is-type-weight-bold is-important promo-small-title\">\n            IT Tools        <\/p>\n        <p class=\"is-type-body-default is-important\">\n            Download this budget spreadsheet template to ensure you have the best visibility into what you can (and do) spend        <\/p>\n    <\/div>\n    <div class=\"promo-small-cta\">\n        <a href=\"https:\/\/docs.google.com\/spreadsheets\/d\/1KAtQXHFAD-LvncQtLLcfVKpDL9ttf5RBGrpSEudnt7c\/edit?usp=sharing\" data-promo=\"IT Budget Template\" class=\"button is-primary-green promo-small-banner-link\">Download Now<\/a>\n    <\/div>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Budgeting helps admins make better decisions about IT resources and teams. It has a positive impact on the well-being and effectiveness of your staff.<\/p>\n","protected":false},"author":150,"featured_media":26852,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[2465,2421,2420],"collection":[2776],"platform":[],"funnel_stage":[3016],"coauthors":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.9 (Yoast SEO v22.9) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Budget Strategies for Your IT Department - JumpCloud<\/title>\n<meta name=\"description\" content=\"Budgeting helps admins make better decisions about IT resources and teams. It has a positive impact on the well-being and effectiveness of your staff.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Budget Strategies for Your IT Department\" \/>\n<meta property=\"og:description\" content=\"Budgeting helps admins make better decisions about IT resources and teams. It has a positive impact on the well-being and effectiveness of your staff.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies\" \/>\n<meta property=\"og:site_name\" content=\"JumpCloud\" \/>\n<meta property=\"article:published_time\" content=\"2021-11-03T17:00:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-08-14T21:30:20+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/jumpcloud.com\/wp-content\/uploads\/2019\/01\/money-and-computer.png\" \/>\n\t<meta property=\"og:image:width\" content=\"500\" \/>\n\t<meta property=\"og:image:height\" content=\"500\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"David Worthington\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"David Worthington\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"10 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies#article\",\"isPartOf\":{\"@id\":\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies\"},\"author\":{\"name\":\"David Worthington\",\"@id\":\"https:\/\/jumpcloud.com\/#\/schema\/person\/185ca12034835ee50ee17b100abdfb2e\"},\"headline\":\"Budget Strategies for Your IT Department\",\"datePublished\":\"2021-11-03T17:00:00+00:00\",\"dateModified\":\"2024-08-14T21:30:20+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies\"},\"wordCount\":2363,\"publisher\":{\"@id\":\"https:\/\/jumpcloud.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies#primaryimage\"},\"thumbnailUrl\":\"https:\/\/jumpcloud.com\/wp-content\/uploads\/2019\/01\/money-and-computer.png\",\"keywords\":[\"budgeting\",\"Career\",\"IT Admin\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies\",\"url\":\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies\",\"name\":\"Budget Strategies for Your IT Department - JumpCloud\",\"isPartOf\":{\"@id\":\"https:\/\/jumpcloud.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies#primaryimage\"},\"image\":{\"@id\":\"https:\/\/jumpcloud.com\/blog\/it-budgeting-strategies#primaryimage\"},\"thumbnailUrl\":\"https:\/\/jumpcloud.com\/wp-content\/uploads\/2019\/01\/money-and-computer.png\",\"datePublished\":\"2021-11-03T17:00:00+00:00\",\"dateModified\":\"2024-08-14T21:30:20+00:00\",\"description\":\"Budgeting helps admins make better decisions about IT resources and teams. 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