To some, budget-writing is an excruciating, tedious process. Perhaps
these people are missing the beauty of budget writing: a well-written
budget will passively boost your influence and promote your value all
In any case, here’s some tips to streamline the business-technology
budget writing process, whether you want to knock it out of the park,
or just get it over with.
Step 1: Break Down Expenditures
Granularity is important when breaking down IT budget expenses. For
convenience, the following list contains a common and comprehensive
organizational structure for IT budget line-item
- Remote workers
- Productivity Software
- CRM Licensing fees
- Project management software
- Communications software
- Tablets and mobile
- Power and climate
- External storage
- Data backup
- Hot site/cold site costs
- Auditing fees
- Data Center
- Network Support
- Server OS
- Specialist training
- Network awareness
- Employee education
- Perimeter solutions
National trends indicate shifting priorities on the aforementioned
categories. While changes vary based on industry and company size, a
2018 survey by IT research firm Spiceworks found the following:
Hardware takes up most of the IT budget, followed by software,
which combined account for more than half of spending.
Hosted and cloud-based services take up between 20-25 percent of
spend at companies of all sizes.
Step 2: Plan for Innovation
This next step is for the go-getters After all, passion for
experimentation and new technology is what draws many successful IT
pros to the field in the first place.
However, risk aversion in other areas of the company can make it hard
to drive change, and business executives can be hard sells on new tech
initiatives. For this reason, it’s important to have a budget with a
built-in innovation mechanism. Risk, failure, and iteration are all
easier for stakeholders to accept when planned for.
To ensure business evolution, ex-Google CEO Eric Schmidt introduced a
methodology called the 70:20:10 innovation rule at his company.
Schmidt’s idea was that Googlers should spend 70 percent of their time
on primary day-to-day functions, 20 percent of their time on
forward-looking growth projects, and ten percent of their time on
The 70:20:10 split has since been adopted by leading IT thought
leaders such as Gartner, who has named the innovation-focused
budgeting strategy the IT Run/Grow/Transform the Business Split. It
breaks down as follows:
Spend 70 percent for core business operations (meeting payroll,
keeping the lights on),
20 percent spending for growth initiatives, and
Step 3: Segment the Budget
There are many ways to carve a budget in addition to the 70:20:10
split and other categories described previously. More segments and
data labels increase budget complexity and are often an improvement
because they speak to the numerous stakeholder concerns within the company.
For example, many IT budgets label line-items by priority. Adding
high, medium, and low designations to cost categories help budget
reviewers understand why some items are allotted more than others,
without giving the impression that some initiatives have just been erased.
Another common practice is which costs are recurring, and what are
one-time expenses. This helps to explain large variances, such as for
hardware refreshing, and will help accounting with their projections.
Finally, it’s often a good idea to help the finance team by
indicating which costs are capital or operating expenditures. Many
finance professionals prefer budgets that are lighter on capital
costs, since capital depreciates, and because IT hardware refreshes
are so costly.
There's both an art and science to IT budget writing. But don't
underestimate the power of the budget to extend your influence.
Use your IT budget to grow the company, champion projects, and
demonstrate business acumen. That way, the IT budget will work
passively for you all year round.