Why you need to create and manage your IT budget

Why you need to create and manage your IT budget

Creating and managing an IT budget is not a task many IT managers enjoy. Why?  Because it’s your responsibility to resolve where to allocate resources, and it can be difficult to reconcile spending an enormous amount of resource on IT, without realising immediate returns.

But IT is an essential part of nearly all businesses and can offer extensive and lasting benefits.  The truth is, much of your IT budget will be driven by your overall business strategy, therefore it is crucial the two are closely aligned. A progressive and forward-thinking business will use the exercise to drive more business growth from their investment in IT.

Producing a clear IT budget for the coming year will assist you in several ways:

  • It provides the detailed funding needed to keep your IT department, or your outsourced provider, running. The budget is an important tool for identifying IT initiatives that are critical to the business.
  • Budgeting ranges from frequent expenses like software leases and staffing to expenditure devoted to a fixed-duration project.
  • If you are planning for regular repairs and maintenance, the budget will help to avoid various repairs, keeping your equipment running smoothly will ensure your employees are as productive as they can be.

How to create an IT budget

Review past budgets

It should be standard practice to review past budgets before you think about creating your new IT budget. This will assist you in understanding whether you were under-budget, over optimistic or whether you planned adequately for unexpected expenses. It is important you justify your budget numbers and ensure that everything is analysed in order that you can present your plans to your CEO.

Plan your budget calendar

Your plan should clearly demonstrate when items, such as new software leases are due for renewal.  This forms an important part of your budget planning and help you in ensuring that you are meeting your deadlines.

Plan strategically

Your IT budget needs to align with your company’s overall objectives. Identify priorities and how your IT spending will help the business, think e-commerce, developing new products and services, or extending your market reach.

Capital, project and expenses

Your IT budget should contain data associated to the capital, project, and operating expenses. Capital expenses will include, but are not limited to; all hardware purchases, software licenses and upgrades any ant replacement equipment.

Operation expenses will include maintenance, hardware support, and software support cost.

The project budget is used to estimate the total cost of a project and includes detailed information of costs likely to be incurred before the project is complete and is the only flexible part of your IT budget.


Your IT infrastructure should be a priority in assisting your business growth. And that makes your IT budget a significant part of your business’s success. You can’t create an IT strategy until you have a carefully planned budget ready to execute.

Put simply, you will not achieve your business goals and potential growth opportunities, without achieving your IT goals.

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