How to Budget 2023 for IT

December 6, 2022 electricoak

2023 Budget

When it comes to IT budgets, often the line-item details are rarely built to meet revenue goals because even the best-intentioned budget can be turned on its head within months. Just look at what happened to the market at the start of the pandemic or after Russia’s invasion of Ukraine.

Budgeting doesn’t have to be so finicky, though. Traditionally, IT budgeting was easier to nail down with certain hard costs for local servers and on-staff IT employees. Today, however, so many operational processes are powered by new software and IT services that the IT budget has become a struggle. IT costs are now spread out across nearly every budget category.

Changing your business’s approach to how the IT budget is built can set a framework for the rest of the budget, too. This shift requires more than plugging numbers into a spreadsheet.

Fortunately, that shift can be made with a simple process. Use this step-by-step 2023 IT budget process to get started.

1: Decide on Your IT Goals

Look at IT costs and spending as an investment in specific IT goals. Start by listing out all your IT goals and then tier them in order of importance.

Some common IT goals include:

After you get leadership aligned on what your primary and secondary IT goals are, you can ensure your IT budget supports what’s most important.

2: Define Your IT Constraints

Goals are great, but there are also short- and long-term constraints to consider. Put all foreseeable constraints on paper and discuss:

  • The likelihood of each
  • The “what if” plan if each were to occur

Some common IT constraints include projected cash flow and overall operating budgets. Will any of the goals you listed above have trickle-down impacts on cash, good or bad?

3: IT by Humans, for Humans

One of the larger budget considerations often missed—especially in IT—is the human element. What IT goals or constraints will have the biggest impact on an employee’s ability to do the job? Which investments will have the biggest return on productivity? How will your IT goals affect employees’ work lives?

If you’re totally in the dark on any of these questions, go over your IT goals with key employees and get their feedback.

4: Fit Everything into Your Overall Strategy

Finally, bring all your goals, constraints and feedback into the context of your overall business strategy. Do your IT goals align with and support your business objectives? Should any IT initiatives move up or down in priority based on what best supports those objectives?

Validate the role of IT in your business’s organization, too. Do you have on-staff IT professionals or a relationship with a service provider? How will those IT professionals weigh in on the budget as the year unfolds?  

By analyzing your IT budget using this simple step-by-step, you’ll easily integrate your IT investments and expenses into the overall categories of your budget that IT touches. With today’s remote and hybrid work, greater data security needs, and seemingly more apps than there are stars in the universe, this process will keep your budget realistic and aligned with your bigger business goals.