In 2020, IT departments were thrown a curveball, as organizations around the world quickly shifted to a work-from-home business model. This change presented a variety of challenges, including how to properly budget for IT going into 2021. While there were a lot of uncertainties leading into this year, the IT trends we experienced helped us predict what would be necessary. But with remote and hybrid work environments becoming the norm, how should you go about building an IT budget for 2022?
Developing Your 2022 IT Budget Plan
Now that we’re entering the fourth quarter of the fiscal year, now is the best time to start working on your IT budget for 2022. The efficiency of your IT program’s current spending can be used to determine what the department should receive next year. The type and size of your company, competitive pressures, and internal culture should also be taken into consideration.
To help you with your information technology budget planning, here are some tips for preparation.
Explain IT Spending in a Way Your CFO Can Understand
Your chief financial officer (CFO) is in charge of financial planning, ensuring that money is always going where it’s needed the most. They use what they know about the company to accurately divvy up funding to each department.
For certain sections of your business, like sales and human resources, it’s easy to see how costs are being managed. However, that’s not the case for IT. A CFO may not completely understand how support costs are determined. Before they give your IT team the funding it needs, your CFO is going to want to know how the money will be spent.
If you want your IT to have the funding it deserves, it’s necessary to get the CFO on your side. This can be accomplished by clearly explaining your IT spending in a way the CFO understands. If you want to increase the budget, you’re going to have to find a good justification.
Do Even More Financial Planning
While it’s a little late to do this now, in the future, conduct a midyear review of your current spending. Usually, you should have a decent idea of what areas are likely to pass and which may undershoot their original budget by the end of the second quarter. Doing this can also make it easier to forecast spending in detail for the rest of the year.
Once this is done, send the report to the CFO. With this information, they can see where you’re likely to need increased funding for next year.
Step Into the Shoes of Your CFO
Before creating your budget for 2022, think about things from the CFO’s perspective. Does your CFO think the company has spent too much on improving office capabilities over the last few years? Do they want to focus on future IT spending for productivity instead? Or maybe they want to funnel money into customer retention solutions?
If you’re unable to answer questions like these, you can’t design a budget that would make sense for your CFO. The more it seems like you’re just throwing out suggestions, the more likely your CFO is to reject your ideas.
What Not To Do
There are plenty of things you can do to create a sensible IT budget for the next year. However, there are just as many things you shouldn’t do, like:
- Building a case around value: You know the value of IT, but value is in the eye of the beholder. If it can’t be backed up by numbers, it’s going to be hard to prove its value.
- Being offended: If the budget is rejected, pouting about it isn’t going to solve anything. The CFO takes a variety of factors into account when agreeing on a budget, and it’s nothing against your IT department.
Let 42, Inc. Help You Create a Budget
The team at 42, Inc. specializes in a variety of IT solutions. When you partner with us, our consultants work with you to provide support and advice. We’ll help you create a budget your CFO can give a thumbs up to.
Contact us today to learn more.