IT Managers Aligning IT with Business Goals Are More Likely to Get Budget Approvals

IT Managers Aligning IT with Business Goals Are More Likely to Get Budget Approvals

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It’s not unusual to encounter a disconnect between a company’s IT department and its executive board. The two parties aren’t always aligned in their goals, and naturally, conflicts can arise. In these circumstances, finding common ground is essential.

For IT managers, priorities tend to centre on security risk management, compliance with regulations, system updates, and network maintenance. Technology is inherently expensive, and fulfilling the expectations of an IT department can come with substantial costs.

As an IT manager, approaching executive or financial departments may be intimidating. Colleagues in these roles might have opposing perspectives, tending to be more risk-averse and focused on minimising costs. This is not to their detriment; each department has its core objectives, and sometimes these will clash. 

What’s important is for each department to understand the other’s concerns, within the context of the company’s universal goals. 

For example, if a company-wide non-emergency software update is required, the finance department may initially turn down the IT manager’s request, because they perceive the costs to outweigh the benefits. However, if the IT manager explains that the software update will help employees to be more efficient, or for data to be better protected, or for proactive future-proofing, the risk balance begins to swing in favour of the IT manager’s request. 

It’s perilously easy to become entrenched in one’s own department, but tribalism isn’t an effective way for departments to coexist. Communication is key to aligning business goals. It can be helpful for representatives from each department to attend the other’s strategic meetings, and to engage in dialogue that brokers will better understand the rationale for funding requests, as well as the reasoning for their approval or rejection.

The use of risk appetite statements – which express the amount of risk a company is prepared to take in order to reach its goals – strengthens this dialogue. 

Taking everything on board, IT managers will be better placed to present their requests in a way that allows their financial and executive colleagues to understand the risks and benefits involved. Furthermore, finance managers will have greater understanding of operational context, helping them to avoid missing out on valuable opportunities due to misinterpretations of risk. 

Boardish.io provides a software solution that allows both parties to better visualise and analyse budget requests, and to issue approval decisions seamlessly.

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Explain why/how your solutions work, to a non-techy audience. 

Average IT Budget by Company Size

Average IT Budget by Company Size

Average IT Budget by Company Size

The IT budget average is continuing its growth in 2020, with over 44% of companies planning to increase their IT budget – this is a 6% increase when compared to 2019, according to Spiceworks’ State of IT report for 2020

The Computer Economics IT Spending and Staffing Benchmarks 2019/2020 report showcases that the majority of IT organisations are taking active steps to move to the cloud, so they are increasing spending too. The ultimate goal is to take advantage of the benefits of cloud software and increase revenue this way. 

Gartner’s 2020 worldwide IT spending forecast details that $3.74 trillion will be spent on IT in 2019, while in 2020 that number will go up to $3.88 trillion. 

How much do companies spend on their IT budgets?

The percentage of spending that goes towards technology varies heavily from one industry to another. For example, a security firm will usually invest more heavily into IT than a construction business, although with the rise of the digital era and IT threats, that’s likely to change. 

The Spiceworks Report shows us that 44% – 63% of companies across all sizes expect budgets to increase, 21% – 31% expect no change and only 4-9% are actually decreasing their budgets in 2020 (the rest weren’t sure yet.). 

When looking at an IT budget breakdown depending on company size, Ailean Inc. did a study on U.S based companies that found small and medium-sized businesses spending around 6.9% of revenue, midsize companies spend around 4.1%, while larger companies spend around 3.2% of revenue on IT

It’s likely that because larger companies can benefit from economies of scale when it comes to licensing, packaging, and direct hardware discounts from re-sellers they are able to spend a lower percentage of revenue, even though their actual budgets will be a lot higher. 

How much Are IT Budgets Increasing?

This is backed by Computer Economics who surveyed businesses on how much they plan to spend on average across their three sizes and found that the IT budget by company size will see an increase for all three.

  • Small organisations with IT operational budgets that are smaller than $5 million.
  • Mid-size organisations with IT operational budgets between $5 million and $20 million.
  • Large enterprises with IT operational budgets that are at least $20 million or above.

What they found out is

Small organisations will be taking the lead this year with their IT operational budgets seeing an average increase of 3.5% across industries. 

Large enterprises follow suit with 3.2% increase, while mid-sized companies seem to experience the lowest increase with 3.0%. 

Across all sizes, the IT budget average increase will be 3.2% for 2020.

Overall

IT is getting more efficient with an average spend per user being lower when compared to the previous year. In 2019, for example, the average IT spend per user was $7,569, a decrease of 7.5% overall. 

New technology and software solutions that rely on cloud computing, automation, AI, and virtualisation make it possible to do more with less, and while the spend per user is lower, the employment trends are positive, with multiple new members being employed in each IT team. 

These findings arm you with with some solid proof on the current trends when it comes to IT spending. Still, you need to build a solid case for a budget increase and explain to those in charge why the proposed budget is important. The average IT budget by company size – how much they spend from the overall budget, and how much they plan to increase it – is a good starting point.

The Easier Way To Get Your IT budget Approved (No Matter the company size)

Boardish allows you to turn IT or cyber threats and solutions into financial figures so that you can compare your exact  IT budget against company turnover and revenue. 

This makes it easier for decision-makers to give you a quicker decision and fast-track the approval process. 

To try boardish completely free, visit: https://app.boardish.io/ to sign up.

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