IT is critical for the competitiveness of any enterprise. As such, IT budgets will likely hold its ground in 2020 from the previous year. But for IT to contribute to the enterprise cause, there is a need to budget correctly!
Here are some critical considerations to get the 2020 IT budget right:
1. Draw up the IT Roadmap for 2020
The IT roadmap is the guide to the what, when, and how of IT solutions, maintenance and changes planned for 2020. The roadmap depends on the corporate strategy for 2020.
Deploying new technology depends on what the company seeks to achieve as part of its overall business strategy. For instance, deploying a field service suite improves control over field technicians. Investing in AI-powered chatbots enhance customer service. An improved ERM system boosts internal efficiency. The roadmap needs to co-opt such new or improved products, as required by the business strategy.
Another important inclusion in the IT roadmap is the plans to maintain existing assets. For example, hardware and software that reach the end of its tether need replacement. Likewise, some services would be better off migrated to the cloud. The best IT roadmap includes all such planned replacements and migrations.
2. Consider the Implications of Emerging technology
Consider the ROI and value-addition of new investments.
The tech landscape is in a state of flux. Adopting new technology is inevitable to pre-empt obsolescence. Many enterprises benefit from investments in emerging technology such as AI and IoT. But buying new technology for the sake of it, or to emulate others is meaningless. Seek competitive advantage or value addition from new IT deployments.
3. Consolidate IT Assets
Invest in asset management systems, and resources to eradicate shadow IT. A Configuration Management Database (CMDB) keep an inventory of configuration of IT assets.
Smart enterprises consolidate their IT assets. Consolidation allows enterprises to understand the true extent and costs of their IT. Companies invest in asset management systems to increase accountability for their IT assets. Such trends bring shadow IT to centre stage. Shadow IT may offer some quick fix. But it comes with serious negatives such as increased confusion and security risks.
4. Collaborate, and Review the 2020 IT Budget with Stakeholders
Gone are the days when the IT head could conjure up a project, get approval, and decide on the details later. Businesses are responsive to the customer needs to develop solutions matching customer requirements.
It is not enough to pamper the end-customer either. End-user engagement in technology purchasing decisions is well entrenched. Bringing functional teams on board improves their commitment and productivity.
Bring stakeholders on board to identify the “gap” in IT resources. The top management seeks answers on how the investment benefits the customer, and add value to the enterprise.
5. Use Proofs of Concept for New Resources
Seek trials and proofs of concept before committing to new technology.
New technology solutions offering the best benefits are rarely plug-and-play. Custom development and deployment cost sizable sums. Top management consent requires a strong positive ROI for the investment.
The pressure on margins makes businesses intolerant towards failures, or even cost-overruns. CFOs and other C-level executives seek assurance on proposals performing as expected. IT decision-makers seek proof of concept before striking a relationship with vendors.
6. Seek Easy to Understand and Transparent Pricing Models
Demand clear-cut price and transparent cloud models from vendors to plan and prepare the 2020 IT Budget.
(Further Reading: Choosing the AI Vendor: 7 Questions to Ask)
Many enterprises that sold to the benefits of the cloud in the previous years now stare at the cost overruns. Complex price models are the main reason they paid more than they wanted to or needed to. Transparent pricing is essential for attributing costs to each service.
Factor in the full costs, including hidden costs. The cloud attracts subscription cost for the service. It also attracts costs to migrate, integrate, and manage cloud-based technology.
7. Revisit Aging Assets
Check on ageing assets coming off depreciation schedules, and its impact on the budget. Replace ageing and depreciated assets with new, efficient and smarter ones. Consider the implication of new technology on asset life and replacement.
The budget exercise is also the time for housekeeping. Clean up the old and obsolete PCs, printers, CRT monitors and other equipment collecting dust in the IT storage closet.
8. Make an Equitable Spread
Make sure your 2020 IT budget covers all areas of enterprise IT. In 2019, most enterprises devoted a lion’s share of the IT budget on security and cloud services. In 2020 tech decision making will become responsive customer preferences. Investment on mobile computing, employee training, and digital technology apps will rise.
9. Budget for Security
The security landscape is full of threats, as always. Malware, ransomware, siphoning off data in transit, and other cyber attacks remain top threats in 2020. Cybercriminals become smarter every year. They even deploy AI to launch attacks. Enterprises have no option but to strengthen their defences.
Increase the budget for networking monitoring, intrusion detection systems, firewalls, encryptions, and other security deployments. Update the Disaster Recovery (DR) solution for backup against natural disasters, ransomware, and other risks. Undertake a risk assessment to determine the best plan of action.
10. Budget to Hire and Keep Skilled Staff
Skilled IT talent is hard to come by. Competition for tech talent will continue to tighten in 2020. Not budgeting adequate funds for resources runs the risk of the best IT staff jumping ship for a better offer.
As the saying goes “if wishes were horses…”. Enterprise resources rarely match the full demands. Even with surplus funds in the bank, the enterprise may wish to deploy it elsewhere, considering the opportunity cost. The best IT budget prioritizes enterprise needs skillfully, within the available resources. For instance, if there is money to do just one thing, they could give priority to a new field service management suite to transform field service operations and institute a BYOD policy, over replacing on-premises PCs which may still have a few years life left in them. Prioritization could also be based on creating synergy, such as shifting to the cloud instead of upgrading the incumbent on-premises set-up.
