Proper information technology spending can reduce costs, improve department relations, and standardize equipment for better IT technical support options. The problem is that many companies shoot from the hip when it comes to budgeting for technology needs.

So how do you get the best return on your investment in technology? Here are the guidelines I try to follow in my organization.

IT budget developed at the department level
Information technology budgets can be sliced and diced many ways. However, the best solution, in my opinion, is to allocate technology spending from the departmental level. In some situations, multiple departments might decide to pool their budgets and purchase computer equipment.

The cost of the equipment or service should be allocated on a percentage basis depending on the number of users that utilize the resource from each department. Because department heads generally control spending, all expenditures, including information technology, should be monitored at this level. This attitude will allow the department head to grasp control of the budget and reduce cost by scrutinizing purchases.

The IT stamp of approval
As information technology professionals, we are constantly worrying about equipment and desktop standardization. We like standardization. One might ask, “If department heads are the controlling point for IT budgets, what ensures that those department heads will all respect our company standardization policies?” Fortunately, in this plan, department heads are the controlling non-technical authority. To ensure that quality, cost-effective equipment is purchased and standardized throughout the company, and all information technology purchases must pass organizationally through a central information technology department.

The IT department should have a list of authorized equipment, which will change to accommodate changes in technology. On the other hand, IT must publish a list of unacceptable products. In the event a department needs an item not included on either of these lists, IT will evaluate and determine whether to purchase this equipment for the organization.

IT—a services department
I am a firm believer that the information systems department is a customer-service-driven organizational unit. The customers for an IT department are simply the users, individually and collectively. Many factors affect the level of customer service from an IT department, but I would like to focus on training. Training benefits information technology departments for two major reasons. By training your IT people, their skill levels exponentially increase, which reduces service and improves quality. Because most technical personnel want additional training education, providing training simply makes the professional happy and more productive.

Why are we talking about training in a budget article? Good question. As a service organization, information technology professionals constantly move employees, install software, and answer desktop questions. In my experiences, I find myself performing time-consuming moves that are often unnecessary and based more on personal requests than business needs.

Since time management is a key component in an IT person’s day, IT professionals generally resent useless moves, additions, or changes (MAC). How can IT reduce the number of MACs? Try attaching a service-level price on IT Functions. For example, if an employee wants to move because a new desk has one more file cabinet, management may be reluctant to pay for a charge from the IT department and squelch the unnecessary move request. (I think I would just buy another file cabinet!)

Where does the money IT earns from the service go? You guessed it: into a special training and bonus fund dedicated to the technical professional. This has many benefits. First, the professional knows funds will be available for training opportunities. Second, because the individual feels he is earning his keep, information service’s level of customer service is greatly improved. The transfer of funds from departmental budgets to the special training/ bonus budget creates exceptional value in the organization.

Controlling IT spending
Spending on information technology should be controlled in two phases. First, the department head determines the validity of the request based on the business need and his budget. Second, the information technology department approves the request based on a set of standards established to control technology in the organization.

This approach will establish a set of checks and balances, so equipment in the field is approved, tested, and standardized. When information technology spending follows the guidelines established by the IT department, the results include total savings, better morale, improved systems operation, and a healthier bottom line.
If you’d like to comment on this article or share your strategy for managing the technology budget, please post a comment below or follow this link to write to Jake.