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Tips for Justifying Your IT Budget for 2009.pdf (34.84 KB)

During this general economic downturn more companies are cutting IT budgets. What should be done to minimize the damage? The best way to justify IT spending is to show how necessary it is to both the short-term maintenance and the long-term development of the company. The best place to start that procedure is with the development of a well thought out planning and budget process which indicates where, why and how money is being and should be spent, and how that spending improves the position of the company as a whole.

In today's business atmosphere it takes care and strategic thinking to develop a budget which is realistic, defensible and can be shown to use IT resources, including staff and infrastructure, as effectively as possible. Strategically, spending should be in areas which can be shown to do one or more of the following:

• Help generate revenue
• Cut costs
• Simplify or increase the efficiency of business processes
• Use infrastructure more effectively

It is tempting hold the line and remain static, but this is not an effective strategy. Times like this should be used as an opportunity to analyze the technology and applications currently being used within the company and to develop well thought out plans for improving them. Working with those using the hardware, applications and programs this is a good time to use resources to:

• Do an application audit, to identify which applications are truly necessary to doing business effectively
• Do an infrastructure audit, and put in place or develop techniques that allow users to do more with less
• Look at developing infrastructure and using applications which allow workers more flexibility in performing their day to day tasks
• Look at developing easier and more immediate ways of communicating within and between departments which will make co-coordinating their tasks easier
• Focus on automating activities which take up unnecessary staff time, to allow more time for other important tasks
• Look at ways to reduce hardware needs and downtime, such as virtualization
• Look for ways to do things which allow a quick return on investment
• Seek out applications which allow flexibility in their use

Look at more cost effective sources for applications and programs, such as open source

The importance of working with others in all areas of the company is much greater in difficult economic times. Their contribution to the planning process for IT development reduces the risk of developing redundant processes, helps everyone involved, and provides an important basis of support and understanding for the work of the IT department. Therefore:

• Involve staff in all departments in the planning process, seeking out their ideas and increasing your understanding of what they need and theirs of what you do
• Work collaboratively with senior staff to define what is important to them and to the company's development
  

Since the IT department within most companies does not directly generate revenue it is important to show how important its activities are to the areas that do. Working collaboratively will help show that projects and spending reflect an understanding of the company's operations, its current position and its future goals. With the help of the other staff you should be able to:

• Identify basic business processes and IT's role in supporting them
• Identify needs which staff feel are not yet being met
• Identify redundant applications and hardware, underused servers, unused programs and old and inaccessible databases
• Learn which types of programs work best for users
• Find opportunities to integrate processes and programs across departments, reducing the need for different applications and hardware and increasing the possibilities of collaboration
• Give others an interest in the success of the IT department's plans and projects
  

By working collaboratively with senior staff and encouraging them to share their ideas and plans you can create a greater sense of being involved in the activities of the IT department and having a real stake in its activities and success.

New and younger workers may come to the company with a different knowledge of and relationship to computer and communications technology. Integrating them into the company and introducing them to the technology in use is also an opportunity to re-examine the methods and content of company training, and the ways that IT can help make it more efficient and flexible. The knowledge some new workers bring to the company may introduce new ideas or be used in training others. Resources used in the short-term to examine current methods of training and develop new, more efficient and effective ones are valuable in so far as they will allow savings for the company as a whole in the long-term. It is crucial to be able to show that this is so.

It is also crucial to show that IT department costs which can be reduced or eliminated already have been, and resources are focused on what is essential. On the list of things to cut:

• Food and entertainment
• Nonessential travel
• Nonessential use of outside contractors and consultants
  

Where possible, contracts with suppliers and consultants should be renegotiated, and the necessity of using outside consultants for training should be re-examined. Using resources inside the department or the company for tasks previously contracted out makes use of internal knowledge to reduce costs. Finding these kinds of costs savings and demonstrating that they are being put in place builds credibility for the IT department and faith in its ability to budget well for difficult times.

One of the most important areas to re-examine is the management of data, including its security. New techniques for housing and accessing data can allow costs in this area to be reduced and the efficiency of storage and access to be improved, and should be incorporated into IT planning and budgeting. While it may be difficult to reduce the costs of protecting data, a re-examination of the techniques and processes used will either justify what is being done now or suggest new directions to move in. In either case, it is an opportunity to show where there is value being provided and make a good case for strong support of these activities.

The best way to justify IT expenses is to show that IT activities enable and support the processes which are crucial to the company's existence and profitability, and do so in a way which is both cost effective and efficient. In changing times this requires a flexibility and openness to the company's immediate and future needs which has not always been seen as the hallmark of IT experts - but which will serve them well now and in the future. A tightening economy should be used as an opportunity to explore and make use of the most efficient ways in which technology can support business processes, to the benefit of both the IT department and the business as a whole.