Big IT purchases are fraught with risk, but careful planning and good research can mitigate this risk and prevent overspending or poor ROI. By following IT budgeting best practices, you can avoid financial disasters and ensure that you have sufficient capital throughout the fiscal year.
Here are some steps you can take to ensure a smooth acquisition process and a healthy budget for your major IT purchase.
Audit your current IT infrastructure and needs
The easiest way to overspend on an IT purchase is to buy stuff you don’t need. Before even starting the budgeting process, assess your current technology to determine what actually needs to be purchased or upgraded and what can get by without new investment. Consult with your IT department or your IT services provider to find out exactly what you should be spending money on and what can wait until the next cycle.
Outline the objective of the purchase and what you hope to achieve
The point of making a big IT purchase is not to have a shiny new thing to show off, but to achieve a business goal such as increasing productivity or improving the cost-efficiency of processes. If you go in with the objective of simply having the latest tech or gadget, you might be ignoring more affordable or more appropriate solutions that could solve your problem just as well. So before deciding on what you want to buy or how much money you want to spend, ask yourself, “Why are we looking to make this purchase in the first place?”
Prioritize business needs
Once you get your objectives and needs laid out, it’s time to triage them. Buying your entire IT wishlist at once is almost certainly prohibitively expensive, so you should prioritize which needs must be met first and which do not warrant new spending at the present time. To ensure that you’re prioritizing investments that would benefit the company, set up some meetings with key stakeholders.
Set your price range
Your price range should not be how much you can spend, but rather how much you should spend. Ask other businesses in your industry, trade associations, or your IT services provider how much a business in your situation should spend on the solutions you are considering. This way, you can set a ceiling on your spending to avoid going over budget.
Do your research
Put the hours in and do meticulous research on the products/services you are looking at. When narrowing down your choices, consider factors such as scalability, compatibility with existing systems, and vendor reliability and support. Get quotes and proposals from multiple vendors to compare costs and features effectively. If you have access to a reliable and experienced IT consultant, lean on their expertise to choose the best solution for your business at the price range you can afford.
Consider the total cost of ownership (TCO)
The purchase price is something you must consider, but don’t forget about all of the other costs that go into owning and operating the technology you will acquire. This will allow you to have a better grasp of how much you will be spending in the long run.
Some expenses in the TCO you might miss include:
- Upgrades and upscaling
- Employee training
- Installation and implementation
- Compliance requirements
Leave some wiggle room
As a business manager or owner, you know that it’s pretty rare for projects to come in under budget. More often than not, projects blow through their projected budgets. This is especially common with IT purchases. This is why it’s important to allocate some contingency funds to accommodate unforeseen expenses or adjustments during implementation.
Look to the future
After your new IT purchase, your work still isn’t done. Track the expenses that come up and monitor the ROI of the purchase. Also, analyze how the new technology impacts your productivity, efficiency, revenue, and if applicable, customer satisfaction. This data will inform future spending decisions and make the next IT budgeting process that much easier.
Planning your next big IT purchase? Complete Document Solutions offers tailored technology solutions and expert guidance to help you conquer the challenges of a major IT investment. Contact us today to learn more.