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Creating an IT Budget-- from SCRATCH!

By drew ·
I could really use some help. I'm new to a small company(about 25 employees), and I've been hired to create an IT department. I can definitely handle all of the work, but I've never been at the management level before so I don't know how to create a budget. My biggest issue is that there are no previous budgets for me to use as a model. Please can you give me some advice on creating a budget!

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First of all...

by Prolifiq In reply to Creating an IT Budget-- f ...

Congratulations on being hired to CREATE an IT department. In a job market where people are now hired to strategically downsize, outsource, or off-shore IT departments, your current plight is refreshing.

One of the best ways I've found for creating an IT budget is to sit down with the boss(es) and determine which technological directions they want to take:

- What short and long-term goals do they have that they're expecting IT to help them reach?

- Do they want PCs for each employee, and how many?

- Do they have servers in place? If so, what type, what OSes, and how much did they cost? Are they still on the company's books?

- What type of network infrastructure do they have and will they want? Ethernet, Token Ring (yuck), wireless...? How many routers do they have in place, if any? Who is their current ISP?

- Do they need remote computing ability (VPN, web portals, etc.)?

- Will they need after-hours support?

- What types of applications and systems will the IT department be expected to support?

- Will you have varied service levels (standard vs. executive support), and SLAs (service level agreements)?

- Does the company have any existing accounts with any hardware/software vendors (Dell, CDW, CompUSA, etc.)? Are there any accounts payable outstanding with them? If so, what's the total debt?

These are some basic questions that can help you to squeeze out numbers and dollars (IT resources and salaries) to help the company reach its goals. You'll probably be able to think of many more questions to ask as you go along.

Hope this helps.

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Basically start with Inventory

by TjD In reply to First of all...

What your getting at is where I have started, twice: Inventory of all assets
1 hardware
2 software/licensing
3 staff/knowledge/skill sets

In the hardware don't forget all the printers, switches, hubs, wires, spares. Count the monitors too. If you can get an asset tag on everything, and make a note of leases, warranties, etc.
In doing this you will immediately note some things that will need replaced first. Same with the software - you find where upgrades are needed and such.

Once you have all this you can look at it and say, "I need to upgrade/replace everything within X years" then start prioritizing. (I do this prioritizing semiannually) Write down the first 2 or three years. Then get some estimates of you hardware and software.
Now you're covering what you have, so you need to cover what's to come. Talk to the higher ups to get some idea of staff growth and figure the hardware/software needed per head. Add in that.
Don't forget maintenance/support/lic costs on existing software packages such as ERP and CRM software.
Some companies might want you to build in broadband costs.
Do you need any contracted services - maybe some web development - is that yours or marketings budget.
Then you need to cover you're inhouse staff. Do they want the salaries in the budget? Probably if you need to increase staff. Skill sets and training can be important item in you budget.

With all that you just covered the basics. Now you need to look at longer term projects. I think one to three big projects per IT person is a fair number for the year. What are the projects - stuff like major system upgrades - moving to Exchange 2003, Upgrading/installing an ERP/CRM/accounting etc., implementing SPAM filtering, upgrading network to gigabit ethernet; basically making solid improvements that aren't necessarily in the hardware/software end of the budget.
I've never been afraid to put in an extravagent budget. I always expect something to get cut and I plan for it.
Beware of under estimating. I got bit this year, under estimated a licensing cost on a software package and had to go back and cut some things out that I had planned. Now I have to cover alot of little things next year.
Good Luck,
TjD

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Start with some assumptions

by JamesRL In reply to Creating an IT Budget-- f ...

Your budget should reflect a few things;
What is the cost of keeping the business running (as it is today)? What growth is expected, both in users and in applications/infrastructure?

The best starting point is to find out what the general business objectives are, and how IT is expected to contribute. What new initiatives are they wanting to start - how will IT be involved? These are more "project" related expenses, versus "operating" expenses - the cost of keeping the existing operation running.


Then build a model using assumptions. I assume that desktops need replacement every 3 years, and laptops every two years. I assume that servers need replacement every 5 years, but that some will be replaced in the process of managing for growth. You probably want to do an inventory of what you have and see what needs replacing over the next year. There are no hard and fast rules.

Go through the same exercise with staffing - you sound like a department of one but determine whether thats going to change or not based on demand.

James

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IT Startup

by djameson In reply to Creating an IT Budget-- f ...

First things first, You need to do a basic audit of the system what servers do they have what routers do they have what type of internet connection they have, what email systems they are using and account for load on the servers. Software being used etc. You really need to know where you're at to build the roadmap to where you want to be.

Build some Goals, Some pretty lofty and some pretty reasonable. I would start with
1. Resilient Active Directory environment
2. Exchange server/ Independent mail (for Privacy)
3. Nightly backups and offsite backups.
4. No computer on the network less then 1Gb and less then 513Mb Memory.
5. No Hubs! move to switches ( If You're planning for Voip get a poe Switch)

Then once you have your list of goals attribute a cost savings to each item. Just guess it'll be close enough
ie.

1. Resilient AD infrastructure ($10,000) 2Domain Controllers 2DNS 2DHCP I would do this @25 users.
reason: Using an integrated Active Directory environment will reduce the total cost of ownership of the network by providing a single management interface which will be replicated to an additional server for an online backup and instant failover capacity. consider the cost of time...

Don't start big, only have 10-15 items and build a small slushpot somewhere for "unexpected capital items" Build your network focusing on security use the Sarbanes Oxley act as a baseball bat, you can get all kinds of stuff that way :)

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Create a wish list

by TheBOFH In reply to Creating an IT Budget-- f ...

Hi

What I?ve done is gone to every dept and discuss what they want to do in the next financial year and plan on that and do a wish list and send to all the suppliers for quotes but what I also add is what can make life easier for the company and also include disaster planning and nice new toys that I can play around with including upgrading servers, pulling out old servers.

Put all on a detailed spread sheet with different categories and at the end combine it all together.
The idea is confuse the bean counters and get budget authorized


Then sit down with the bean counters and argue about how much they want to spend and what must be left out. It is really a lot of fun.

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IT Budget software

by andytech79 In reply to Creating an IT Budget-- f ...

InfraSage ITM suite provides software that helps SMBs like yours to create and manage their IT Budgets, IT Expense/Spending tracking and IT Forecasting based on it's intuitive, easy to use web based software. You can do a free sign up here at,http://www.infrasage.com and you can find lot of information related to IT Budget at their blog:

http://www.infrasage.com/index.php/blog

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