The days are growing shorter, leaves are changing color and there’s a chill in the air — all sure signs that we’re in the thick of budgeting season. It’s a crucial time of year for IT organizations to evaluate evolving business and technology trends and ensure that the most critical and strategic projects receive adequate funding and attention.
As you prepare your budget for 2024, consider the following suggestions for establishing IT spending priorities that also drive business strategy:
Align IT and Business Goals
Too many organizations still view IT as a support service to be delivered at minimal cost rather than a strategic capability requiring significant investment. Such a mindset often leads to inefficiencies stemming from short-term tactical IT deployments and the inefficient use of human and technological resources. Communication and collaboration with staff, managers, executives and other key stakeholders are essential for ensuring that technology investments directly contribute to organizational goals. Through such collaboration, organizations can review proposed IT projects, define the business case and allocate resources based on the project’s strategic impact.
Utilize a Governance Framework
A formal IT governance framework establishes rules, policies and processes for the use and management of IT resources. This structured approach helps organizations prioritize projects and allocate resources based on their importance and potential return on investment (ROI). By defining clear policies and procedures, a governance framework also helps companies comply with legal requirements and industry standards, reducing the likelihood of costly regulatory violations.
Optimize Cloud Spending
Nearly half of the average company’s technology budget is now spent on cloud services, but studies show much of that is wasted on overprovisioned and underutilized cloud assets. Businesses can gain control over their cloud expenses by embracing FinOps, a management practice for continuously auditing, analyzing and adjusting cloud resources and costs to ensure they align with business objectives.
FinOps also intersects with IT asset management (ITAM) practices designed to identify and track all IT assets, including cloud resources. This helps organizations identify underutilized assets and make adjustments to avoid overprovisioning and overspending. ITAM resource tracking also enables organizations to allocate cloud costs accurately to different departments or projects.
Prioritize Security
Ransomware, denial-of-service attacks, data breaches and other types of cyberattacks create unpredictable impacts on the IT budget. The financial consequences of such attacks can be devastating, with costs related to lost data, fraudulent transactions, legal fees, recovery and remediation often soaring to $1 million or more. The indiscriminate nature of cyberattacks makes it impossible to accurately forecast what your security costs will be in any given year. To be safe, organizations should set aside a portion of their budget for unforeseen security incidents or expenses. It’s also a good idea to budget for regular vulnerability assessments that will help identify potential security threats, vulnerabilities and the potential impact of security incidents.
Review and Adjust
The IT world is constantly evolving due to rapid advances in hardware and software, the growth of cloud-based solutions and services, and the ongoing proliferation of new devices, platforms and Internet-connected systems. Regular budget reviews allow organizations to adapt to these changes, ensuring they remain up-to-date and efficient. Business strategies can shift over time as well, and IT budgets should be flexible enough to support these changes. Regular reviews ensure that IT investments are aligned with the organization’s current priorities and help identify areas where costs can be optimized or reallocated to more valuable IT projects.
IT budgeting is always a challenging process, but it does create opportunities to demonstrate how IT can facilitate business goals. Contact us to learn more about using the budgeting process to drive operational improvements.
