How CIO's Can Get the Most ROI From Their IT Budget

IT budget

Planning an effective IT budget is an essential component of any successful CIO’s job, but how to strategically plan an IT budget is easier said than done. Actualizing a carefully-planned IT budgeting strategy can be difficult with balancing priorities across departments with that of long-term goals. 

By following some of these best practices and tips, your IT budget can be planned to most effectively put your company resources where they should be allocated for the greatest ROI.  


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What is IT Budgeting?

Every company in the modern era needs a certain IT budget, but the amount of money allocated to various IT programs depends on the organization’s priorities. IT budgeting can encompass a wide variety of IT projects and technologies all through the organization, so there is no one standard version of an IT budget. It can range from an annual budget to project-specific. While CIO’s generally oversee IT Budgets, the IT department as a whole is involved since department goals and initiatives across the organization need to be covered. 


FAQs on IT Budget Planning

IT budgeting can come with plenty of questions. Here are some of the most common!


Why Does IT Budgeting Matter?

IT budgeting is essential for identifying the IT strategies, initiatives, and goals that are key for department success. Planning ahead of time can ensure that the IT budget is well-developed and understood by all involved. 


Whom Does IT Budgeting Affect?

Although CIOs may be presenting and executing IT budgets, the budget defines all IT activities across the entire organization. Since the IT budget outlines allocations for the year, it affects all departments. 


What Are Your Goals When Planning Your IT Budget?

The answer to this question will depend on your organization’s priorities. With so many department demands, planning a successful IT budget will involve identifying which budget request to honor and which goals to emphasize throughout the year.


How Long-Term Should Your IT Budget Be?

While many organizations plan their budget for the year, others have a month-to-month IT budget, and even others have both. Determine which option would suit your organization’s goals first before creating an IT budget template. 


Why Accurate IT Budgeting is Important for Your Organization

A well-planned IT budget is essential for any organization to allow departments to continue operating successfully. Technology spending is no longer a side-cost for business spending; it’s now an important part of any organization’s budget, and IT budget planning involves thoughtful and accurate planning. 

Accurate IT budget planning can allocate funds to allow organizations to provide new IT capabilities to better serve customers, streamline operations, and enhance collaboration - whether as a short-term or a long-term investment. Most technology decisions are a long-run investment; while they may not deliver immediate returns, they are necessary for continuous digital transformation strategies organizations need for success. 

The key to successful IT budget planning is not spending the most funds, but spending those budgets wisely. Ongoing technology assessments can provide an accurate picture of the organization’s existing technology to identify which investments can deliver the greatest returns. Since every IT-related investment has the potential to impact costs, accurate IT budget planning is essential for providing guidance for the greatest financial and operational agility. 

IT team creating budget


Common IT Budget Categories

A comprehensive IT budget should extend over your entire organization. Budget planning should account for needs such as routine maintenance, hardware and software licenses, warranties, and routine maintenance - as well as the off-chance there are system failures. Here are some of the common IT budget categories to consider.  


Routine Maintenance 

IT environments need support and maintenance to run properly. These ongoing expenses are necessary for user support and to maintain network infrastructure integrity. 


Hardware & Software

This category should include any ongoing hardware and software support contracts, as well as any purchases that are anticipated. 


Cloud Services 

IT budgets should include a category for any private cloud, public cloud, or hybrid cloud costs and implementation. 


Disaster Recovery

It’s important to budget for any costs associated with disaster recovery, business continuity systems and plans, and backups in the case of a disruption. 


Initiatives & Projects

Any strategic initiatives and projects planned for the year should have their own category in an IT budget. 



An effective IT budget should always allocate funds for any unforeseen events/emergencies.


How CIOs Can Create an Effective IT Budget

Budgeting is a critical component of a CIOs job, but how can you ensure it’s done correctly? There are certain steps CIOs can take to strategically plan the most effective IT budget. By taking these additional steps, you can help create the ideal IT budget for your organization's specific needs and goals.


Understand the Costs of your Recurring IT Expenses

While some costs vary throughout the months, there are certain IT expenses that remain the same year after year. Your recurring costs may look different from that of other companies or competitors. 

Some of the more common recurring IT costs include:

  • URL registration
  • Software license renewals
  • Cloud storage space

One of the easiest ways to find recurring expenses is to look at the budgets of previous years. 


Track Inventory of IT Equipment 

Updating IT equipment will need to be allocated for in your IT budget. By tracking your IT equipment’s condition and age, such as that of WIFI routers and servers, you can be better aware of when your equipment needs to be upgraded and allocate the funds to those budget categories accordingly. 


Communicate With Other Departments 

When planning an effective IT budget, it’s important to understand the IT needs of departments across your organization. This includes taking the time to hear requests from managers and employers and prioritize what expenses will allow your organization to receive the most ROI. 


Invest For Future IT Budgeting 

The ideal IT budget allows for the allocation of funds for department needs while updating technology investments for the future. Part of this includes planning for the future. This may mean allocating funds to research and development to improve your business's operational agility and competitiveness. Additionally, researching future IT needs and goals will aid in planning your IT expenses in the next year or more. 

IT team


Five Best Practices for IT Budget Management

Follow these best practices for enhanced IT budget management so your departments can receive the most out of your budget planning. 


Review Previous IT Budget Spending 

Upcoming IT budget planning should take into account the previous year’s spending as a starting point. Review what was spent in last year’s budget to determine variances to allocate funds more effectively.


Be Transparent 

Since an IT budget affects an entire organization, having it hidden away as a secret will only do more harm than good. Transparency about IT budget spending for all other departments allows them to see what they can spend on training, hardware, software, and other IT categories.


Stay Organized 

Disorganized IT budgeting will only overcomplicate fund allocations and may cause your organization to either overspend or underspend. To avoid misunderstandings between departments in the future, it’s important to make the IT budget easy to understand for the best communication. 


Avoid Inaccuracies

IT budget planning should be as thorough as possible to avoid conflicts down the road. While some spending amounts may need to be tweaked, entire categories of funds should not need to be transferred to other departments.


Continuously Review Monthly Budgets

Reviewing your IT budget every month is a proactive habit to see where you’re overspending and underspending. Certain trends in categories can be monitored to make better-informed decisions when planning next year’s budget.  


Make the Most of Your IT Budget With DSM!

When planning your IT budget, you want to ensure you’re making the most effective use of your time to receive the greatest ROI from your budget. Joining forces with a single provider who can deliver comprehensive, integrated technology solutions provides not only simplified budgeting, but also enhances flexibility. 

As Florida’s preferred cloud provider, DSM has been managing clients' IT needs for over 30 years, and we have experts who are ready to help. Have questions or concerns about your IT budget plan? Contact us today to see how we can help. 

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