IT Budget

Recession Obsession

If you’ve been alive 10 years, you’ve been through a recession – the Great Recession actually.  If you’ve been alive 20 years, you’ve been through two recessions.  30 years on the planet will give you…you guessed it, three recessions.  Although recessions do seem to be cyclical, they don’t always happen every 10 years. Over the last 50 years, there have been 7 recessions.

Gas Lines and Baby Food Jars

RecessionThe ramifications of a recession also change over time. Being 53 years old, I recall my grandparents saving every coffee can, baby food jar, and plastic container to repurpose and use for storing things throughout the house.  As products of the Great Depression, they were raised to literally save everything.  I can also distinctly recall having to wait in long lines for gas during the recession in the 1970’s.  My father and I would park the car in line at the gas station and go to the nearby strip mall to kill time for two hours while we waited for the line to move.

Although not a recession, I recall Black Monday in 1987 when the stock market dropped over 22%.  I was working at a financial planning firm at the time and that was not a good day, and not just because it was Monday.

Dot Bomb Bubble Burst

In the early 2000’s, the dot com bubble burst, and turned into the dot “bomb”.  It seemed like anyone with a web-based idea was given millions of dollars in funding without having to show any DownGraphprofits (a scenario which still occurs today).  eToys.com, Webvan.com, Pets.com, and many more all wiped out almost overnight.

Most recently, we can all recall, if not relate, to the Great Recession that occurred in 2007-2009 when the housing bubble burst due to the subprime mortgage crisis.  The term “government bailout” became a major thorn, and the nemesis for many household brands.  Many are still recovering from this economic meltdown. However, the prosperity over the past 10 years has dulled some of the sting.

But, some are now warning us that the great run we have enjoyed may be slowing down, and we’re potentially headed for a recession.  Search Google for “Recession 2019” and you’ll find blue-chip names discussing the very likely possibility that a recession is looming.

Before it's too late!

CrisisI have owned a technology company, Fluid IT Services, for the past 17 years, and we felt the impact of the 2007 recession – but in an interesting way.  We provide IT solutions and support for small to mid-sized businesses, and the cost of our services is typically less than the cost of one full-time employee. Although we lost the clients who unfortunately went out of business, we gained new clients who needed to cut costs and couldn’t afford full-time IT staff.

We certainly had to cut costs ourselves and manage everything more tightly, but we were okay because our risks were spread sufficiently, and we provide a service that is “recession friendly”.  We continued to grow as the economy improved, but always with a keen eye on our market segment and the economy as a whole.

As the economic signs, signals, metrics, statistics, etc. started showing a downturn, we’ve used it as an opportunity to get our business in order.  It’s much easier to evaluate all your people, processes and technology-related costs, and make sure that your business is operating as efficiently as possible, before things go south.

Every company has and uses technology (IT) constantly. Most companies today wouldn’t be able to function without IT.  But, when times are good, costs related to IT (and other business functions) may not be closely monitored because sales and revenue can cure many ills.  However, it’s best to ensure your IT house is in order before the times get tough and budgets get tight.

Start by asking questions

An analysis of your current IT spend at a detailed level, may be as exciting as watching paint dry, but it’s crucial when dollars tighten. IT cost analysis can also be difficult. Even knowing which items to include when analyzing your IT spend can be confusing. I’ve found that it’s easiest to start by asking questions…

  1. What are my costs for internet, phones, software subscriptions, IT support, computers, etc.?
  2. What hardware needs to be replaced soon? How much will it cost to replace?
  3. What costs can be reduced or eliminated?
  4. What costs are a bare minimum to keep the lights on?
  5. When was the last time I evaluated all my contracts related to technology and what are the terms? Being locked into an expensive 5-year contract at the beginning of a downturn is no fun.

Good news...

We can help! At Fluid, we help companies analyze their IT costs almost daily. So, we already know where most of the IT costs are found, where the skeletons are buried, what is reasonable, and what is outrageous.  As a provider of outsourced IT services for small to medium businesses, we have to know these costs because we’re responsible for managing them in order to be a good steward with our clients’ hard-earned money spent on IT.

We also take it one step further by using a more proactive and strategic approach to IT. We will hope for the best, but also help you plan for the worst by discussing current and future business needs, goals and “what if” scenarios. Once we have this information, we can provide guidance on ways to cut IT costs and suggest solutions that will generate revenue, and specifically align with each clients’ business plan.

Don’t be afraid to say you don’t know and bring in experts to help you understand your costs.  It will reap rewards now and help you sleep better when economic conditions do change.  Feel free to call Fluid IT, we love this stuff!  Our main objective is to help people with their businesses and see IT in action!

Cybersecurity - "You can't handle the truth!"

I’m a guy who likes sports and movies, and my wife tells me that I’m constantly quoting sports analogies and movie tag lines. Guilty as charged.  So, why do I do that???  Because I can quickly state a movie quote or sports reference to explain a situation to someone, without having to spend an hour doing so. If I tell someone “you just fumbled”, knowing this person likes or understands American football, he or she will immediately know they made a mistake.  Notice how I stated ‘American football’ lest I confuse it with the round ball version and defeat the very purpose of my analogy.

ManYelling

The problem is, if I use my linguistic mojo on people who don’t follow sports or movies (yes, those people do exist), I not only don’t get my point across, I confuse them.  Many times, I get that tilt-of-the-head puppy look and then a nod, never asking me to clarify what I meant.  It’s surprising how many people never ask the question – I don’t understand, what do you mean?

This can be very frustrating and even a cause for escalating arguments and disagreement later.

To clarify, here’s an example of a recent conversation when discussing a company project…

Me: “We’re at the one-yard line!  It’s time to punch it across the goal line!” Colleague: “Got it!  You can count on me!”

A week later…

Me: “So that project was completed, right?” Colleague: “No, I’m still working on it.  I need to add some more detail." Me: “What!  I thought I told you and we agreed this needed to be done asap!? Like yesterday.” Colleague: “Oh, I’m sorry.  You didn’t tell me it was urgent.” Me: “I did tell you it was urgent.  Remember ‘the one-yard line’, ‘the goal line’?” Colleague: “Yeah I kind of recall something like that.” Me: “Then why didn’t you get it done??” Colleague: “Why are you yelling at me?  I have no idea what you meant.” Me: “Why didn’t you ask?

And the downward spiral continues.  The frustration level for everyone is extreme.  Worse yet, the project was not completed, and the company suffers.

I see this same scenario over and over again as it relates to technology and business – especially with cybersecurity.

Get serious about cybersecurity SecurityGuard

Articles are published every day stating how businesses aren’t taking cybersecurity seriously enough only to be completely ignored.

I constantly come across articles that give real statistics showing how businesses think they are secure, yet they have recently been breached or compromised!  How is that possible?  Why do businesses, led by extremely smart people, continue to ignore the very real threat that cybersecurity breaches and hackers can easily compromise their business’ livelihood?  Why do they continue to have incidents, and not learn from them?

Some studies show, many business owners rely on their insurance policy to save them instead of protecting their assets proactively.  I believe some of that is true, but I believe the real issue is a complete disconnect in communication.

The danger of miscommunication

MiscommunicationThere is a very real and dangerous disconnect in communication between business and IT!

I read an article recently that was trying to get businesses to understand the importance of cybersecurity and the importance of communication between IT and business.  Here is how the article begins…

 

ArguingDigital transformation is happening rapidly in every industry. As companies move toward software-defined infrastructures (SDI) connected to powerful cloud ecosystems, they can tap into the near-real-time intelligence from the data gathered from every edge of their business, helping to drive faster business decisions and changing the way they serve their customers.

Rapid transformation, however, without a solid plan, can produce cybersecurity vulnerabilities. As infrastructures go virtual, security models need to shift. To avoid serious risks and security management issues, companies need to identify challenges, strategize, collaborate, pilot, test, and evangelize. *

 

Did you have to read it twice?  Did you understand even part of it?  What exactly is ‘every edge of their business’?

“Trust me, Greg, when you start having little Fockers running around, you'll feel the need for this type of security.” Meet the Parents, 2000

Yes, I did it, I used a movie line from the great film “Meet the Parents” to make my point.  If you haven’t seen the movie, you have no clue what I’m talking about.  Business leaders have not seen the cybersecurity movie!!  They don’t understand a word coming out of your mouth (another movie reference).

Don’t allow technology to get lost in translation

LostTranslation

In all seriousness, business leaders have not taken the time and do not have the time to learn all the parlance of cybersecurity.  Yet, we keep pummeling them to death with cyber techno-speak.

The reality is, both business and technology leaders have a responsibility to their companies, their employees, and themselves to learn enough about each other to make the conversation relevant.  I can keep showing business owners all statistics. But, most of them still don’t properly plan for or budget for cybersecurity, and most will only do so after they’re hit with ransomware or have a breach.  But what is ransomware?  What is a breach?  What do they look like? What is the actual cost to the business now and in the future?

This is not a one-sided issue. IT professionals also need to learn how to translate technology jargon into terms that business owners can understand.

The same case can be made for IT experts making an effort to understand the language of business and understand the impact they are having.  When business owners and leadership speak in terms of EBITDA, CAPEX, OPEX, Life Time Value, Gross Margins, Net Margins, Cash Management, etc., they are speaking a language immediately understood within the group, but many times foreign to the IT group.

At some point, business owners, leadership, and even board members must work with IT experts to start taking cybersecurity more seriously.  Both parties must be willing to have an open dialog where each is not afraid to ask questions, educate and translate into terms each party can understand, to make better business decisions.

If you want to have a discussion regarding your business and how the cybersecurity landscape impacts your company now and in the future in a language you can understand, contact us! We will be happy to advise and educate you in this increasingly complex space.

May the force be with you!

 

* AT&T Cybersecurity Insights Vol 7

We've moved everything to the cloud, we don't need IT staff or support.

It’s Fall, the weather is cooler, football is in full swing and we finally moved all our systems to the cloud.  No more worrying about having the deal with all that techie stuff.  Life is good! vectorstock_3501851

 

“We’re in the cloud, we’re all good.”  We hear this all the time from business owners. The number of companies using cloud services for all their business software is increasing. With no servers and software in the office, many people have the misconception that any hardware still onsite, requires no attention.

So, when asking owners and CEO’s about their IT needs we get the quick “We’re all good, everything we have is in the cloud.”

This misconception is not only inaccurate, it is extremely risky.

While it is true that cloud solutions can mean computers in the office, laptops and desktops may not need to be as beefy because all the work is ‘in the cloud’, the fact remains there are still devices, and more importantly, users that will require the same level of IT support and responsiveness from their IT staff/provider.

Security is a primary concern when in the cloud.

In the “old days”, users would login to software and systems running on servers in the closet.  When there were issues, the IT guy would come to the rescue, and they would take systems down to do maintenance, upgrades, etc.  Having your software in the cloud can be very easy to use, convenient and appear to not need the same ongoing care and feeding, which can be mostly true and a great advantage of the cloud.  But that one first step – logging in, is still a critical component to ensure proper security is in place for accessing systems now in the cloud.

Managing security is still a core requirement for every business and with the “sprawl” of cloud solutions, many companies use multiple cloud applications requiring multiple logins and passwords.  On the other end of that cloud application is a user that still requires support when things go wrong, or when they want to add something new.

Users still exist and need to be supported

Seemingly simple cloud applications like DropBox still require security settings, user settings and support in a business environment.  You probably don’t want all employees to have access to sensitive HR data.  Users still must be added and managed, printers still stop working (the bane of my existence), and laptops and desktops still fail.  Assuming there is no need for IT support, puts the company back into reactive mode, only addressing needs after something happens.

Reverting to reactive support is a step backwards in user productivity

Most of what IT does is under the water line.  Like the propeller and rudder on a boat, you can’t see them, but they are required if you want to move forward in a precise direction.  Technology is only visible when the business and users are accessing it.  Much of the cloud is below the water line and appears to work on its own, but it still requires the skilled engineers and technicians to ensure everything is working to meet the business goals.

When you add the ongoing and more visible needs of the end-users, having good, proactive managed IT support and security is a MUST! Therefore, even when everything is in the cloud, having the right IT support can make the difference between success and failure.

How 20 Minutes Can Save Your Business: 4 of 4

In my previous post, I promised 4 topics that if considered may make you re-think outsourcing IT.  We started with the specialized knowledge required to keep IT running smoothly for a business today.  No one (or two) person will have it all.  If you missed it, check it out here.  Next we covered the strategic role IT should play in your organization.  Here's #2.  In my third post, I covered reducing risk.  Sometimes we don't consider how much key-person risk we have in our businesses.  This post will help you consider that. Today, I'm going to focus on cost.

Reason #4 - Cost is King: Why Managed Services are MORE Affordable

For small businesses, costs are a critical measurement. The cost to maintain an internal employee’s technical acumen can be monumental. Salary, workers compensation, benefits, and payroll taxes are not cheap. Small companies do not have access to healthcare discounts that large enterprises can harness. Adding regular and expensive training for an IT staffer is a significant increase to those costs. Every course sponsored by your company makes an employee more valuable on the open market. Every course neglected creates risk for your business.

If you are making investments in hardware to maintain an on-premise environment, what happens in the event of an economic downturn? There is no better example than that of the ever-changing Oil and Gas industry. I have seen large infrastructure investments made during a growth period, followed immediately by a downturn. Many found themselves paying for hardware they can no longer utilize effectively.

All things considered, outsourcing IT is less expensive than the cost to maintain a full-time employee. If your industry is facing a downturn, a managed services agreement allows you to scale down. When you experience growth you can easily scale up. You gain access to a team of experts instead of relying on the expertise of one person or a small team. A recent Gartner study cited that 80% of small business would “realize significant savings from outsourcing e-mail management alone.” Imagine the savings in outsourcing other technology components.

Bottom line: If you own or operate a small business you should be evaluating IT outsourcing. A 20 minute conversation might just change your life.

 

How 20 Minutes Can Save Your Business: 2 of 4

In my previous post, I promised 4 topics that if considered may make you re-think outsourcing IT.  We started with the specialized knowledge required to keep IT running smoothly for a business today.  No one (or two) person will have it all.  If you missed it, check it out here. Today, I'm going to focus on the strategic support you get from the right IT partner.  IT should be a business enabler, not a cost center.  The right partner will provide that support.

Reason #2 - From Password Resets to Profit (Setting an IT Strategy)

If you currently have a full-time IT employee or team, how often do they approach executives to get input on how to better support the business using technology? Based upon experience, my guess would be not very often. Smaller IT shops typically do not have the time to keep all of their systems up to date (not to mention password resets, break/fix, email issues), much less consider how to make the technology profitable. The most valuable function an IT organization can provide is not just keeping the lights on, it is enabling the business to grow.

Outsourcing your IT to a managed service provider gives you access to consultants that will work to align technology with your business strategy. Some even provide virtual CIO services, such as planning a technology roadmap, developing an IT budget, and analyzing and reworking business processes.

How are you mitigating the risks associated with maintaining an IT environment? See our next installment on Reducing Risk.

 

How 20 Minutes Can Save Your Business (And Your Sanity)

You are busy, I get it. There is not enough time in the day for you to finish the tasks on your plate, much less extra time to evaluate new technology options. Whether you are part of a small internal IT team or your company has added IT maintenance to your ever-growing list of responsibilities, Fluid has you covered.  There are 4 key reasons to consider outsourcing IT that you may not have thought of in the past.  I'll cover these reasons in a 4-part series.  So if you have 20 minutes, read on and we might be able to change your IT life!

Reason #1 - Specialized Knowledge

I recently participated in a meeting with a potential managed services client whose IT staff consisted of two full time IT employees who both left the company unexpectedly. The reasons they exited are common in small business, though are not often considered in decisions regarding outsourcing. For one employee, the responsibilities were just too overwhelming and they could not handle the workload; the other believed that they did not have a vertical career path. Unfortunately, most small companies cannot afford IT employees with the depth and breadth of knowledge required to adequately run an entire IT environment. Many of the good ones don’t stick around because they are offered more money for their skills by larger companies. The damages left in the wake of their departure were systems and hardware that had not been updated in years, creating significant risk for this business and few options to resolve the issues quickly.

With the decision to outsource, you leverage the collective knowledge of a much larger IT organization. You receive the benefit of much broader coverage, access to expertise and skills you would not have otherwise, and reassurance knowing that critical systems will be maintained consistently.

Are you getting the strategic guidance that you need to grow your business? Check out the next installment on General Business Consulting.

 

Security Breaches: The Kiss of Death for Small Business

For romantics, a kiss signifies love, affection, or respect. Unless you receive the kiss of death, which signifies that your days are numbered. For small business, a cyber-security breach is the dreaded kiss of death. security metrics 2.0Here are some stats that’ll start your heart from recent studies from Property Casualty 360 and Small Business Trends:

- 62% of cyber-attacks are focused on small to medium businesses - Only 14% of these businesses rating their ability to mitigate an attack as highly effective - Average cost of a breach for a small business, including damage or theft of assets and disruption of normal operations is slightly over $1.8M - 60% of small companies will go out of business within six months after an attack

While it may be surprising that 60% of SMBs attacked will be out of business, once you understand the typical cost of a successful attack, it’s far less surprising.

So do small business owners just give up in the face of these threats? Nah, that’s not the way entrepreneurs roll. Most small businesses can outsource the mitigation of this risk for less than $1K per month, offloading both the risk and the time that it takes to manage a security solution. For a small business, this can be the difference between life or death, much like an insurance policy.

In the world today, it’s no longer a matter of IF your company will be hit by a cyber-attack, it is a matter of WHEN. The question that you should ask yourself is, “Do I have almost 2 million dollars to handle it retroactively, or does it make more sense to spend $1,000 per month to proactively protect my livelihood and my customers?”

For a frank discussion on cyber-security and ways to mitigate these risk, reach out to Fluid. We can help.

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How to Build Your IT Structure from the Foundation Up

aligning business and ITMy father ran a fence and ranch supply business for 30 years without having any technology. He was quite proud of this. All receipts were handwritten and he did not take credit cards. But the simple truth is his business couldn’t exist that way today. You can’t run a business without technology anymore. Not just because it’s inefficient, but also because technology is now critical to providing customers with the best service and experience.

What are the baseline IT needs for my company?

Every company has baseline, foundational IT needs upon which business-specific technology is built. The great news is that baseline technology is similar for almost every company in every industry – so establishing your technology foundation should be pretty straightforward.

The Foundational Layer

In every company there will be layers of technical solutions, which are stacked to meet business needs. Business-specific technology is built on top of baseline technology, and users (employees, customers, vendors, ect.) are set up on top of it all.

Think about your baseline technology as the plumbing for your house. Plumbing is done first, unseen, and is critical to supporting the daily needs of the household. You build the house over and around the plumbing – and you build your business-specific technology over and around your baseline technology.

So what, specifically, is your baseline technology? It’s the core technology for communication and collaboration. They don’t call a technology network a “network” for nothing – your network connects all the pieces together so you can communicate.

Baseline technology typically includes:

  1. Security
  • Examples: firewall, anti-virus software
  • Examples: network switches, routers, wireless access points
  • Examples: network cabling for computers, phones, video, etc.
  • Examples: physical or cloud-based servers to host business software
  • Examples: laptops, desktops, tablets
  • Examples: Local or remote printers
  • Examples: Windows Server, remote access, email, data backup, accounting
  1. Networking
  1. Cabling
  1. Servers
  1. End-user devices
  1. Printing and imaging
  1. Core baseline software

Keep in mind that even baseline technology is not a “one and done” solution. All technology has a useful life — typically in the 3-5 year range — and must be replaced at the end of its lifespan. Plans and budgets should be developed to replace each accordingly.

The “House” Layer

Baseline technology – or your technology foundation – is very standardized and repeatable. It’s like toilet paper – everyone needs it and it must be continually replenished.

The next layer of technology, built on top of your baseline layer, is your business-specific technology. Think of this as the “house” that’s built over the foundation of the baseline layer. Most business verticals have a range of hardware and software solutions specific to the particular business – so this is where things get narrower in scope.

For example, someone in the oil and gas industry may use Well Pro 101 for their wells and OGSYS for geology data. A home builder may use BuildLinks software for construction management. These are solutions built on top of the baseline technology.

What Kind of Structure Do You Need?

When the time comes to determine your baseline and business-specific technology needs, at least two people need to be in the room:

1)    A skilled technical resource to define solutions to meet all your baseline needs

2)    A business person that can define the business requirements for the right business solutions

This is where the real value is – aligning the technology to the business!

Once you confirm your baseline technology needs and your business-specific technology needs, you will then need someone to support it all. Typically, IT support services are also broken down into baseline and business-specific.

Business-specific technologies are more commonly supported by the vendor that provides the solution. For example, BuildLinks, Inc. will support your BuildLinks software, and Programs 101 will support your Well Pro 101 software.

For your baseline technology support, however, there are thousands of IT service firms to choose from, because the technology is basically the same for any company in any industry. Choose someone who understands how all of the technology works together with your specific business needs and requirements.

Not to toot our own horn, but assessing your business requirements is where Fluid always begins every new client relationship – no matter how small or how large your company. We develop an IT roadmap for you and continually update it over time to ensure continual alignment between IT and business. Whoever you choose to work with, make sure they understand your business.

From Reactive to Proactive: The Perfect IT Budget

budgetingLet’s be honest. You probably don’t budget for IT like you should. Maybe you didn’t even know you need to budget for IT. Let’s get this straight right now. You need to create a budget for your IT expenditure. You budget for your car, right? You account for the monthly payment, the oil changes and the car insurance. Managing the cost of IT should be no different.

Creating an IT budget should be a business priority – but it’s something a vast number of our clients have not done when we first begin working with them.

Read on to learn the benefits of a proactive IT budget — and how you can use it to get one step ahead of your IT costs.

Common-Sense Solution to a Common Business Problem

Small- and mid-sized businesses are often so busy doing business, they have no time to devote to IT — much less time to proactively budget for it. IT is often treated as a “one and done” activity. The fact is, IT is an ongoing, never-ending business function which requires continual care and feeding.

Here is a common scenario we see…

Business owner: “What do I need so I can communicate with my customers, do my accounting and track my sales?”

Geek: “Oh, you need a 720 class server with 64GB of RAM, 2 quad core processors, 500GB of storage, a backup drive and UPS.”

Business owner: “Say what?! English please and how much will it cost?”

Geek: “You need a server to run your software and store all your data. It will cost around $6,000.”

Business owner: “$6,000!!! So once I buy the server I’m good to go, right?”

Geek: “Well no… you also need a 323C firewall and a 7748 switch.”

Business owner: “Come again??? What for and how much??”

Geek: “For securing your server and connecting your devices… about $4,000.”

Business owner: “I really don’t want to spend that kind of money.”

Geek: “Well then I can’t do what you asked for.”

Business owner: “Okay, here’s $10,000. Now get this done and go away!”

Three to four years later…

Business owner: “Why are our systems so slow? How come our systems are going down all the time? Where is that geek again?”

Geek: “Oh, your server, firewall and switch are out dated and end-of-life… you’ll need to buy new hardware.”

Business owner: “I’m done!”

Sound familiar? That’s not surprising. This example of an IT need is actually a tiny sampling of what actually goes into IT for a business. You can see why it is so important to proactively budget for it before these situations arise.

Whether you buy your IT systems or rent them, there is an ongoing cost for IT. In the scenario above, the business owner spent $10,000 for three years of usage. In essence, they rented the solution for $3,333 a year. When you add the cost of end-user devices (like PCs and tablets), software, IT support, etc., there is a very real monthly cost to run IT — and this should be accounted for in your budget.

Making IT Budgeting an Annual Exercise

Creating an IT budget should be at least an annual exercise. It may even make sense to do this bi-annually or quarterly, but we’ll use an annual schedule as our example here.

During this annual exercise, budget for IT deliberately and in detail, considering IT costs in alignment with your business needs now and for the next 12 months.

Budgets should be driven from the top down, not bottom up. In the IT world it is very common and tempting to react to situations and circumstances rather than plan proactively for them. How many times have you had a computer virus, which then led you to purchase anti-virus software? Driving budgets reactively will not only limit your budget to low-value-add “tactical” items, more importantly it will not be representative of what your business actually needs.

A top-down budget should start with the company’s primary goals and objectives for the year. Business objectives should drive IT imperatives, which then drive IT implications and eventually the initiatives and discrete projects that should be undertaken in the coming year.

Creating a budget using your business objectives also ensures IT stays aligned to your business and creates a common communication mechanism for business and technology resources to use throughout the year.

It’s never any fun to watch a CFO receive an invoice from an IT provider and go white with fear and then red with anger at the “surprise” in the invoice. If you have an IT budget aligned to your business objectives, you minimize, if not eliminate, these surprises. It also ensures that IT helps drive the business as an enabler rather than just a cost center.

 

Step-by-Step IT Budgeting

Ready to create your IT budget? Here are the basic steps to start the process:

Determine what the boundaries are for your IT budget. What is in-scope and out of scope? Consider:

  • Hardware
  • Software
  • Support renewals on hardware and software (always one people miss)
  • Rent on hardware and software
  • Telecom — phones, internet, voice service
  • Website development and hosting
  • Custom software development
  • IT support

Identify what core systems you use. Typical systems include:

  • Email (Microsoft Exchange, Google)
  • Accounting (QuickBooks, PeachTree)
  • Customer and sales management (ACT!, Salesforce)
  • File sharing/document management (Windows folders, Dropbox)
  • Primary business application(s) based on your industry
  • Security — firewall
  • Network — switches and wireless access devices
  • Phone system — central “box,” user handsets, licensing
  • Internet service (Time Warner Cable, Verizon FiOS, AT&T)

Identify what user devices you use. Consider devices such as:

  • Laptop PC and/or Mac
  • Desktop PC and/or Mac
  • Tablet
  • Projector for presentations

Identify if there will be any additions, deletions or changes to 2 & 3 above. Think about:

  • Adding new employees creates new users in many systems
  • Changing from owning systems (CAPEX) to using the cloud (OPEX)
  • Opening a new office
  • Changing phone systems
  • Changing any of the core systems
  • Systems that will become end-of-life and need replacement

Based on the above, determine if your IT support will change or remain the same

Make sure you spend extra time considering user device costs. This is one budget item that often bites businesses when they don’t plan proactively enough for it. Here is an example of a painful issue we often see:

A business starts out with 5 employees and over the next two years grows to 30 employees. Over those two years, they bought computers for each user as they were hired. Four years later, the company has 30 machines all out-of-date at the same time.

No company wants the surprise and extreme cost to replace 30 machines all at once. To address this, you should define a laptop/desktop refresh strategy that will force an annual budget.

For example, if you have 36 machines and the expected life is 3 years, one approach would be to take 36 machines divided by the 36 month life span to arrive at a refresh rate of 1 machine per month. You can then budget proactively for the cost of purchasing 1 machine per month, or 3 machines per quarter. You would buy the machines consistently over time, replacing the oldest machines with the new ones. This ensures your business will always stay current with IT and avoid that one-time sticker shock associated with replacing all the machines at one time.

Practice makes perfect. Strive to create your IT budget around the same time each year. Typically, the best time for budgeting for IT is in November/December when things slow down, current year budgets are near their end, and your business goals and objectives for the next year are already established.

Finally, if you do not have an IT person or staff to help you create your budget, reach out to your vendor(s) providing IT support services. Any vendor worth their salt should be ready, willing and able to sit with you to create and manage to your IT budget.

Car Spa Focuses on its Core Business by Moving Data Management to the Fluid Cloud

After a winter storm with power outages revealed limitations and inadequacies of Car Spa's in-house IT systems, Car Spa engaged Fluid. The results for Car Spa were greater IT efficiency, availability, and security detailed in this case study. Read More

Simplify IT: Six Ways to Reduce Complexity

IT complexity within an organization grew over time for multiple reasons but can be reduced. The Boston Consulting Group provides a blueprint to successful IT-simplification resulting in an IT organization that supports company objectives. Read More