How to write an IT budget for 2019

How to Write an IT Budget for 2019

 

It’s that time of year again where many of us are determining the IT budget for 2019 and beyond. At 360 Smart Networks, we have been doing this for our clients for many years and would like to give you some pointers.

It can be a daunting task to try to achieve 100 percent accuracy, but you can establish a solid plan by calculating some key costs.

 

All IT budgets should cover the following:

 

  • Capital expenditures -Hardware and software.

 

  • Operational expenditures – Support costs, project costs, managed services, business expenses, warranties, and renewals.

Let’s start with capital expenditures.

 

Most organizations should have an asset register. If you don’t, the process gets a bit more complicated, but can still be done. Start off with the following premise:

 

  1. Desktops are replaced every 4 years ($1500/desktop)

 

  1. Servers are replaced every 5-6 years($10,000/server)

 

  1. Laptops are replaced every 3 years ($2000/laptop)

 

If you have a full asset register, map their ages and follow the rules above to know what you need to replace. If you don’t have a register, take the total value of all your equipment based on the budgetary number and divide the number by four.

 

Example-

40 desktops (40x$1500)

2 servers (2x$10,000)

10 laptops (10x$2000)

= $100,000/4 – Replacement $25,000/year

 

Next up are operational expenditures.

 

They get more complicated but should be doable if you have historical data.

 

Support costs:

 

Divide your total 2018 support spend by your endpoints (servers, desktops, and laptops).

 

Example-

$35,000(from 2018)/52 – Gives you $673/year per endpoint. Use this number to calculate support costs for 2019. If you plan on adding servers or users, increase your endpoint total to reflect reality. If you have lots of personnel turnover, take that into account by adding at least $600 for every add, move or change as it relates to employees.

 

Project costs:

 

The surprising number here is 24 percent. That is the percent of support costs that most companies will spend on projects (labor for a new server, upgrades, new firewalls, replacement WAP each year. This reduces every year by approximately 1.5 percent due to things like cloud expenditures. Yet, the money isn’t saved. It’s paid to different vendors. Often this might be bundled into single year budgets, but it will be spent. For example, four million Windows 8 servers will have to be upgraded in the next 18 months due to Microsoft stopping support. If you didn’t spend the money this year, you will eventually.

 

So, if your support costs are going to be $50,000 you can almost guarantee that you will spend at least 24% percent of that on project related expenses.

Managed services: (Office 365, anti-virus, etc.)

 

This is easy. Look at what you spent on services like this in 2018. Divide by your endpoints and extrapolate if you foresee any changes in the numbers.

 

The other pieces can be handled in the same way. Take your costs associated with business upgrades and warranties and divide it by your endpoints. This should give you a good starting point to determine costs in 2019.

And finally, the bigger picture.

 

Now that you have your budget as it relates to endpoints, you must consider the following variables and trends.

 

  • Moving to the cloud– You’ve heard about the cloud and how much money it’s saving, but that’s not necessarily accurate. The simple fact is you are moving expenses from CapEx to OpEx, but you almost always end up paying more to someone else. This isn’t necessarily a bad thing, but it has its pros and cons.

 

  • Cost of security– You can safely assume that you are going to spend more money on securing your systems than you are paying at present – it’s getting worse every day.

 

 

Things that will blow your budget out the water.

 

Now that you have your 95% accurate budget, consider the likelihood of the following and how it can impact your budget:

 

  • Personnel additions (moves and changes) – This can and will blow up your support budget. Remember that every time you add or remove a user you add $600 to support. Take this into account if you are in a high turnover environment.

 

  • Security incidents– A security issue in 2018 cost the City of Atlanta six million dollars.

 

  • Massive unplanned growth – Make sure everyone understands the costs of adding an employee or location. People often underestimate the cost of growth.

Finishing up your IT budget.

 

If you have done everything above, you are on the right track to establishing your IT budget for 2019. There is one thing left to do. You have to make provision for the unknown. Technology is changing so rapidly you don’t want to be caught unawares. Go ahead and add a safety factor (1.1 x budget number) minimum. But feel free to increase it based on your specific situation. The cost of not doing the needed will be much higher than overestimating your requirements.

 

Interested in more detailed advice and planning help from an IT professional? We can help. 

Avatar
Marius Nel
Published on November 9, 2018
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