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Evan Carlson | September 22, 2020

6 IT Budgeting Best Practices for 2020 and Beyond

As 2020 draws to a close, many IT leaders are crafting the budget for the upcoming fiscal year – and chances are, this year will present new budget challenges for even the most seasoned managers due to remaining effective in a post-crisis world.

With the boom in telework, the service desk is likely contending with a higher volume of tickets and may be looking for ways to optimize current costs and gain the highest ROI on software investments while enacting IT budgeting best practices. At the same time, leaders may be tasked with finding line items to eliminate or merge, creating a new juxtaposition between providing necessary services and driving innovation, yet doing so on a skeleton crew. The need for a guided set of best practices going into the end of 2020 and the beginning of 2021 has never been more necessary.

For the rest of 2020 and beyond, these budget best practices and areas for cost optimization can help guide leaders to make the right decisions, no matter how difficult.

IT Budgeting Overview

Creating your IT budget is crucial to staying on track and preparing for future disruptions. A properly crafted budget will allow for both expected and unexpected expenses while simultaneously ensuring that the department can and will continue to run smoothly. Ultimately, the right budget can increase growth and can lead to areas of massive opportunity that will allow the IT department to remain a proactive business partner rather become than a reactive cost center.

Creating an effective budget requires several IT budgeting best practices and outside-the-box thinking during the planning process. A few best practices include:  

Best Practice 1: Forecast Your Projected IT Budget Growth

After the pandemic, IT leaders who may have expected a budget boom may have to adjust their expectations. Budgets in 2019 forecast an increase of 1% in IT spending, but because of the pandemic, spending is now expected to fall by 8% in 2020, according to Gartner, or more optimistically, decrease by 5.1%, according to IDC. 

It might seem impossible with so many factors to take under consideration but forecasting projected growth or decreases will help keep the department stable. This should take into account the growth needed to keep salaries competitive and to cover additional licensing price increases.

Best Practice 2: Evaluate Your Asset Inventory and Hardware

Before you can begin to create a strategic plan for new technology investments, maintenance, and hardware upgrades, you should first know exactly what you have and what stage in the lifecycle it is in. This can be resolved with IT asset management, which answers a few important questions, including: What assets are you out of? What do those assets cost? Are your warranties intact?

An IT asset management tool will track software (software asset management, SAM), hardware, licensing compliance, and license expiration and will integrate with IT service management activities. The tool will mark the location of every asset and facilitate changes in location – be they physical or digital. When creating the budget, evaluating asset inventory, especially where potential costly upgrades may be needed, can prevent future hiccups in meeting budgeting goals.

Additionally, when negotiating with your vendors it’s critical to know if they’ve delivered on their commitments. Service Level Management is a core component of contract management. Use this data to ensure the business owner or vendor relationship team is equipped with all relevant information regarding vendor performance. A good business partner vendor will seek long term cooperation based on their SLA achievements and successful outcomes for your organization.

Best Practice 3: Identify Your Budgeting Timeline with Specific Dates

Just as you would in itil change management, you should also set very specific dates and goals regarding your budget. These dates should take into account service desk metrics and should be flexible to allow for major changes (for example, pandemic planning, M&A, expansion to new markets) while attempting to remain structured enough to avoid service disruptions.

For example, set specific dates when the budget should be drafted, reviewed, and implemented. Additionally, schedule reports that show actual year-to-date spend against allocated budgets to review with managers along the way and determine if any changes are needed. This can be especially important when the IT department is trying to tackle a major project or if a new hire is needed, and frequent check-ins can prevent frustration for both managers and the team.

If you are looking to optimize the budget, set goal dates to have specific projects implemented (like optimizing the costs of IT Service Management software by utilizing the tool outside of the IT department).


Best Practice 4: Set Key Budget Management Roles

Again, the topic of IT budgeting best practices brings to mind ITIL’s change management best practices. Change management specifies roles that should be assigned during any change process, which creates a system of checks-and-balances and prevents the bulk of the work from being heaped onto one person. The same idea can, and should, apply to budget creation and management.   

Typical budget roles include:

  • Budget planners - those who take part in creating the initial budget
  • Budget managers - those who manage the budget set forth
  • Budget contributors - managers from the service desk who know the real need
  • Budget coordinators - those who communicate the budget crafted by leadership

There should also be someone who can objectively audit IT spending periodically. This can be an outside auditor, an internal auditing group, or a task force created by someone outside of the IT department in the finance department to review and audit the budget and spending to identify potential areas for optimization.

Additionally, members of the executive committee, like the CFO and CIO, should be included when approving the final budget. Remember: the best budgets take into account several stakeholders. When everyone is taken into consideration along with clearly measures business outcomes, the result is more comprehensive and thorough.  

Best Practice 5: Outline Short Term and Long-Term Objectives

IT budgeting best practices dictate that the final budget should take into account more than just simple line-items. It should take under consideration the long and short-term objectives of the IT department as a whole. In other words, these objectives should go beyond reducing the bottom-line.

Long-term goals should consider the push for digital transformation, implementation or cost optimization using an existing ITSM software, the addition of new team members, and future upgrades to hardware or software. Short-term goals may include a variety of factors, like the immediate cutting of costs, projects with fast turnaround time, and transitioning from the team working remotely back to the office. Don’t forget: Always retain a portion of budget for innovation.

A short-term investment that can positively impact the mid-term budget while garnering a high ROI and cost reduction should be considered as well. This may come in the form of implementing a self-service platform to further the shift-left approach, causing a reduction or deflection of low-level tickets as employees solve their own issues. Meaning self-service can be a short-term goal with long-term budget implications. This approach can also be used in other departments to maximize ROI.

In defining long term and short-term objectives, you may find it easier to evaluate which tools will help accomplish those goals and which are too costly. For example, if your ITSM tool can be leveraged enterprise-wide to support digital transformation, that can help you decide both a long- and short-term budget goal.

Financial objectives should also include ongoing education for the IT service desk and team as a whole. Education may seem like an additional budget item when the need is to reduce costs, but a better educated staff reduces turnover and increases employee and customer satisfaction, all while ensuring that you are getting the most out of the tools your team is using.

Best Practice 6: Develop Budgeting Contingency Plans

There was no way for anyone to predict the Covid-19 crisis and the havoc it would wreak on IT teams and budgets. But now that it has happened, leaders are using the crisis as a major learning opportunity and it has further highlighted the demand to be able to quickly pivot. This is where budget contingency plans come into play.

A budget contingency plan sounds like something you would only need to mitigate crises like pandemics, hurricanes, earthquakes, fires, or other disasters. And while those are definitely important scenarios to keep in mind when planning any budget, that is not the only type of contingency plan that may be needed.

Budget contingency planning should include a provision for a project to excessively exceed the budget and performance plan. Additionally, it should account for the cost of resolving major service disruptions should there be a data breach, virus, or other major issue. Taking time to fully sit down and think through possible “what if” scenarios and factoring those costs into the budget can save major stress and money in the long run. Think of it as creating insurance for any problem that may pop up.

Long-Term IT Budgeting Best Practices Pay Off

Taking the time to create a budget process can pay off – literally. Evaluating your current tools, like your ITSM tool, and thinking through software that can be leveraged to serve the entire enterprise will help optimize your budget and propel your team into a more organized, streamlined way of working within your parameters. Further, implementing a self-service portal for employees can reduce IT call volume directly factors into budget planning.

With the need to keep your IT team focused, especially in the coming years as the market grows and changes, a comprehensive budget will be one of the best ways to equip the team with what they need to succeed while taking market share from competitors that are only focused on reducing services and costs.

To learn more about how to optimize your costs and gain the best ROI from your ITSM software, get a personalized ROI consultation with our experts!

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Evan Carlson

Evan Carlson joined EasyVista in 2010 as the first employee in North America. He is currently the Chief Revenue Officer responsible for revenue growth and profitability across marketing, sales, services, support and customer success. Carlson previously served as VP of Sales at EasyVista to establish and grow the business with empowered teams, innovative sales strategies, and long-term customer relationships. Before EasyVista, Carlson held leadership roles for technology vendors including OPNET, Optinuity (acquired by CA Technologies), and Visual Networks (acquired by Danaher Corporation).