When executives and board of directors ask "Do we have a budget for 2022?" IT leadership hasten to attempt an accurate account of current systems, services, and subscriptions. Unfortunately, the continued trend is to do more with less; increase dependency on IT while allocating less to the overall budget. Many organizations fail to recognize the link between IT budget and protecting business assets or improving productivity and efficiency. This article will explain how to prepare your 2022 IT budget for success in all of these areas.
An IT Budget is the total allocation of IT spending over a 12-month period for a corporation. It consists of capital expenditures (CAPEX) like costs collected for the purchase of hardware, servers, and equipment. It also includes operational expenditures (OPEX), which would consist of costs for the purchase of Software-as-a-Service (SaaS) licenses, Infrastructure-as-a-Service (IaaS) subscriptions, internet, utilities, and contract-based services.
As a whole, your IT budget should account for the costs of hardware, software, personnel, outsourcing, disaster recovery, and support services.
Without an IT budget that allocates funds towards each of these components, an organization might find itself justifying every IT expenditure as it comes up, making for unnecessary overhead. In addition, it could set an organization up for shadow IT.
Shadow IT is the implementation of specific technology, applications, and processes by individual departments instead of a centralized IT department. This often increases cybersecurity risks and decreases the sense of accountability. Coming up with an IT budget eliminates unnecessary spending and keeps your organization on track.
On average, businesses should spend 4-6% of their revenue on IT. Various industries tend to average different percentages. From driving revenue to reducing overall costs, there's a number of benefits that a company can earn from investing properly in their IT environment.
Ultimately, the final number will depend on the company. While technology costs can seem high at times, technology can dramatically improve company performance in all areas.
Making sure your goals align with your IT budget decisions is a crucial aspect of successful IT budgeting. As you would with a personal budget, you should assess the pros and cons of each purchase. Does the business need to invest its budget into a certain innovation? Can the business afford the long-term maintenance costs of a new purchase?
It is even more important to prioritize cybersecurity with today's ever-evolving cybersecurity threat landscape. An easy way to determine what an enterprise should prioritize when it comes to their IT environment is by taking a straightforward IT Security and Infrastructure Assessment. This helps IT managers cut through the noise and get actionable, prioritized recommendations to help:
By embracing IT budget alignment, enterprises can achieve their revenue targets and exceed business goals.
According to Gartner's IT spending forecast, IT services are expected to increase 8.6% to $1.29 trillion in 2022. Since digital transformation is a high priority for many organizations, it makes sense that IT services are becoming a high priority as well. Enterprise software is projected to have an 11.5% growth rate in 2022, which would be the highest yearly rate yet. As shown through software like Microsoft 365 and Google Cloud, prices are increasing due to licensing policy and inclusion changes like added security features as a result of cyber threats.
These cyber threats, especially ransomware, are fueling the increase in cyber insurance premiums as well. Cyber insurance providers are seeing the increase in cyber threats and claims, taking advantage of what appears to be an emerging market. In spite of these increasing premiums, there is a hightened demand for cyber insurance. Why? Businesses want to protect themselves by mitigating risks while being cost-conscious. Hence, why they often make the mistake of making budget cuts where they shouldn't.
"IT budgets aren’t growing as fast as cyber insurance. For some reason, businesses keep making the same mistakes. Despite warnings of labor shortages or of salary increases, cyber insurance pricing increases, and supply chain shortages, they demand more for less budget. When businesses include a Managed Services Provider in their planning, they lock in labor rates for the future."
James Shuler, Director of Business Development at Centre Technologies.
Future-of-work investments will exceed $1 trillion globally by 2024, according to research by International Data Corporation (IDC). Because the tech landscape continues to evolve with various technologies and services that aid the workplace, IT budgets are forecasted to increase. If enterprises desire to stay at the top of their game and ahead of the competition, a well-thought-out IT budget will be the foundation to their success.
If budgeting your technology investments in 2022 seems like a daunting task or you just can't take the time for it, contact a quality assurance specialist here at Centre Technologies. We can help you plan a IT budget for 2022 that aligns with your company goals and fits perfectly in your budget.
Want more information on where tech is headed in 2022? Check out our podcast, When Bits Hit the Fan. In our latest episodes, we interview CISO Anthony Leatherwood about cybersecurity and how to keep your business protected in today's dynamic threat landscape.