The Top 3 Reasons Why IT Budgeting is Critical to Your Firm’s Success

Somehow, December is upon us yet again, which can only mean one thing: a lot of businesses out there are currently trying to figure out how to hit the ground running as we move into 2020 in just a few short weeks.

Not too long ago, I sat down with a fairly new client of ours for a lunch meeting and we were discussing this very process. As someone who has been in this business for many years, it's something I'm going through right now myself - so it was nice to commiserate with someone about all of it for an hour over a delicious meal.

But when the topic turned to budgeting, this client said something to me that I'd like to take some time to discuss with all of you today. He told me that the 2020 budgets for nearly all of his departments were accounted for, with the sole exception of IT. He said he didn't really "see the need" to put too much thought in it because he saw IT as a way to "maintain the status quo," so to speak. Other areas of the business were responsible for growth and innovation, so he'd rather focus his attention on those elements instead. He'd figure out his IT budget as he went along next year.

While he's certainly entitled to his opinion... it is MY opinion that he is dead wrong. Because IT budgeting isn't just critical to the health and well-being of your technology infrastructure. It's absolutely critical to your firm's long-term success for three major reasons that I'd love to take the opportunity to explore.

It All Comes Back to Your Goals

One of the major reasons why IT budgeting is ultimately so critical to your firm's success has to do with the way that it forces you to review both your short and long-term goals.

IT spending doesn't happen in a vacuum. Every purchase you make is purpose-driven - meaning that it's supposed to help you accomplish something. Without reviewing those short and long-term company goals, you won't know what those accomplishments actually are. But once you do have that moment of clarity, it funnels back into the way you're spending your money when it comes to technology. Therefore, IT budgeting almost becomes something of a self-fulfilling prophecy.

Are you trying to continue to grow? Are you in the middle of a digital transformation? Do you just want to continue to run as-is? IT budgeting can help with all of these things, all while assisting you in better aligning your IT strategy with your long-term objectives as an organization.

Efficiency is the Name of the Game

Another one of the many reasons why IT budgeting is so important has to do with what your technology can actually do for you in the right circumstances.

A well-designed and thoughtfully constructed IT budget can help businesses like yours run far more efficiently. This in turn allows you to provide better services to your own clients, all while better managing your assets as well.

Therefore, IT budgeting and solid financial planning absolutely go hand-in-hand. Financial planning is a core part of every other department in your business, so why should your technology be any different?

IT Budgeting = Good Financial Planning

At this point, you also need to consider the implications of NOT properly budgeting for IT - both in terms of financially and with regards to the other negative impacts that this can have on your firm, too.

If you're still operating with older equipment and software, there's a very good chance that you're not compliant with rules and regulations in a number of ways. You probably don't have the cyber security assets you need to protect both your firm and its clients, and you're likely dealing with inefficiently trained employees, too. All of these things are liabilities that won't just land you in trouble - they'll probably also drive a lot of your clients into the arms of your competitors, too.

In the end, there should be multiple versions of your IT budget whenever possible. This puts you in the best possible position to analyze both your financial capabilities and your technical options, too. Ideally, this is something that you should be doing beginning in October and lasting all the way through the end of the year.

Never forget that as a business leader, you're making countless important decisions on a daily basis. But unless those decisions are based on actionable intelligence and insightful analysis, you can never be truly confident that you're making exactly the right move at exactly the right time.

Your IT infrastructure is critical to your firm's success, which means that your IT budgeting is critical, too. Without the second element, it's almost impossible to account for the first - which means that accomplishing your goals as we move into 2020 becomes far, far more difficult than you realize.

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