Technology Budget Checklist: 9 Investments to Include

We're into budgeting season, which means it's time to plan for how much your organization will spend on everything from payroll to utilities to equipment supplies. Budget planning should also include your information technology (IT)-related expenses.

To obtain a rough idea of how much your business can anticipate spending on IT in 2019, analyze this year's expenses. Doing so will give you a sense of how much you can expect to spend monthly and throughout the year. It is important to note that IT expenses are often inconsistent year to year. They may even vary significantly from one year to the next if your business undergoes significant changes.

To put together as accurate of an IT budget as possible, here is a checklist of nine areas to consider and, if applicable, include in your budget.

1. Capital purchases. If 2019 is the year you add a significant new IT solution to your organization, it's important to get as good of an estimate as possible of how much the system itself will cost and all costs associated with adding the solution. This may include installation, any new hardware needed to properly power the new system, user licenses and staff training.

One capital purchase you may need to plan for concerns upgrading from Windows 7. If any of your computers still use this operating system, 2019 will be the year to finally make the move to Windows 10. That's because Microsoft will no longer provide security updates or support for PCs running Windows 7 after Jan. 14, 2020. While your organization will still be able to use computers with Windows 7 as their operating system, this would be a mistake. Without Microsoft's support, these workstations are more vulnerable to security risks. Note: If workstations are used for anything involving protected health information, they will effectively become non-compliant with HIPAA and the HITECH Act once Microsoft stops providing security support.

Upgrading over from Windows 7 to Windows 10 can be a tricky process and one that may require significant investments. It takes time to upgrade existing systems and purchase new workstations, and time to configure and deploy to work properly. Your staff may require training on how to properly and effectively use the new operating system. Take all these factors into consideration as you lay out your plan and strategy to upgrade without causing a significant interruption in your operations.

2. Plans for growth. Is your organization expanding its location or moving into a new building? Looking to add new service lines or expand existing services? Any growth your organization experiences will likely bring with it added IT costs, such as new computers and workstations, software licenses, telecommunications (voice and data services) and cabling.

3. Security and compliance. Businesses big and small are in the crosshairs of cybercriminals. If a business has data perceived to be of value to a cybercriminal, it is imperative that the data is properly protected. That requires investments in cybersecurity

Cybersecurity should be viewed as more than an IT concern. It's a business concern, and one that requires a persistent effort and culture that needs to align people, processes, and technology. It must include regular cybersecurity assessments, testing and monitoring, and a strategy for risk containment, remediation and response using the latest antivirus and firewall solutions.

Partner with a cybersecurity expert that can objectively assess your organization's cybersecurity practices and develop a plan and policies that proactively mitigate risk and react to events such as data breaches and disasters. Furthermore, such a partner can help ensure the security solutions put in place help your organization maintain compliance with rules and regulations.

Note: Budget for conducting at least an annual IT security risk analysis and any necessary remediation to help ensure your information is kept secure.

4. Disaster recovery and business continuity. An IT disaster can occur at your organization at any time. It may be small, such as a single computer performing a critical function going down. It can be medium-sized, such as wireless networking going out, crippling devices that rely on a wireless signal to function. Then there are major disasters, such as if your business is hit by a cyberattack like ransomware that can block your ability to use technology and even wipe out essential data.

Any disaster can easily have a substantial, negative impact on finances and operations, with IT downtime costing organizations hundreds of billions of dollars every year. All businesses need a robust disaster recovery and business continuity plan. Such a plan should identify the steps an organization will take to recover from an IT disaster and how to maintain business continuity during and after the disaster.

If your business lacks such a plan, it is critical to invest in and complete development of one as soon as possible. If your organization has a plan, budget for its testing in 2019. If your business adds new IT systems next year, the plan will need to be updated accordingly and should be retested to help ensure a seamless business continuity strategy in the event of a disaster.

5. Maintenance and upgrades. IT systems typically have maintenance costs associated with them. The costs for keeping mission-critical solutions current generally run around 20 percent of the original licensing cost for the software.

Ask your vendors if any substantial software upgrades are planned for 2019. If so, determine whether your existing hardware can support such upgrades. If it cannot, factor in the cost of hardware upgrades.

6. Contract renewals. As with any contracts your business signs, those pertaining to IT need to be periodically renewed. These contracts include managed services agreements, telecommunications and phone systems.

Before you budget for the costs of these contracts, assess whether the contract's parameters still meet your needs or if you need to upgrade or downgrade. Note: Address whether you need to change your contact prior to the renewal deadline or you may need pay a premium for changes after the fact.

7. Warranties. Your organization's major technology equipment (e.g., servers, firewalls, switches) have warranties that expire. You will want to budget for extending/renewing those warranties that make sense, taking into consideration the age of the technology, or having a backup plan if you do not extend a warranty. This may include replacing the equipment under warranty before the warranty expires or at least developing a response plan in case equipment not under warranty fails.

8. Staff training. It's easy to focus on costs associated with purchasing hardware and software when planning an IT budget, but one area often overlooked is staff training associated with using the technology.

Effective staff training may require more than just an investment in time. Many system vendors host conferences for clients and their staff. These conferences can provide a wide range of educational opportunities, including training on current features, discussion of new features coming down the pipeline and networking with other users, which can provide helpful guidance on maximizing use of the technology.

Other technology training opportunities include webinars (some are free, while others may have a fee) and bringing in a technology consultant for on-site training. When an organization invests in staff training for use of its IT, productivity, efficiency and even staff satisfaction tends to improve. Consider allocating some money in the budget for staff training. Even a small investment can go a long way.

9. Cloud adoption. A growing number of businesses are moving some — if not all — of their operations to the cloud. In fact, one estimate projects that 83% of enterprise workloads will be in the cloud by 2020. There are many benefits of cloud computing, including flexibility, remote access, disaster recovery, easier software updates, reduced expenses (e.g., servers), remote access and security. While cloud adoption is not for everyone and every system, organizations should at least consider whether moving to the cloud could be worthwhile.

There are three core steps that a company experienced in cloud migration will take to help assist your organization in its journey to cloud utilization. A cloud readiness assessment gathers your data to determine what kind of resource usage you should see in the cloud and establish a cost model. A cloud roadmap will help determine if a hosted private cloud, public cloud or hybrid cloud is best for your workloads, performance level and future needs. Finally, cloud migration services move your infrastructure, applications and business processes to the cloud while mitigating risk and maximizing performance.