6 Common IT Budget Blunders
1. No agreed IT strategy or plans
No IT strategy means ‘the IT guys’ will come up with a new way to spend money every week. And no clear plans means that everything is an unwelcome surprise. The IT team won’t know how to explain why something is worth investing in. It feels like they’re going off in the wrong direction because there is no agreed direction.
2. Allowing suppliers to tell you what you need
Given the opportunity, your suppliers will be very happy to tell you what you need – and they will make a great argument! They have things to sell and targets to meet! Don’t talk to suppliers without understanding what you want to achieve and why you’re talking to them. Shop around. If it’s a serious decision then organise a serious tender process based on what you need, rather than what they want to sell you.
3. Overrunning Projects
A seriously overrunning project can torpedo your IT budget. And the most common causes of overrunning projects are companies who buy products they don’t fully understand; suppliers who don’t have the capabilities they claim; and projects that lack direction and aren’t adequately managed.
4. Just renewing a contract because it’s the easiest thing to do
There’s value to be had in doing a benchmark exercise if nothing else. Look around, talk to some other companies. There may be lengthy notice periods so start the renewal process early enough that you have time to consider alternatives without missing the deadlines. Let the supplier know that you’re doing that. Prices will tumble, service levels will improve. Just renewing means the supplier is only making more profit from you, nothing more.
5. Buying products you don’t need or can’t use.
We see plenty of clients who’ve spent money on things they don’t use. Amazing but true! If you’re buying something make sure you understand the value it will deliver, make sure you understand the full effort and cost necessary to deliver that value, and make sure a senior member of the team is on the hook to deliver this entire journey.
6. Not agreeing service levels and key performance indicators
Spending money without checking you get what you’ve paid for is just bad business. All IT services, whether they are insourced or outsourced, need to be monitored and a simple set of KPIs should be the main dashboard. You must define what you want in terms of service levels and KPIs and, for external suppliers, bake this in to the contract.
Finally, remember that you can bring IT costs under control, but that doesn’t means much if your IT isn’t delivering real value and contributing to your business objectives.
Freeman Clarke is the UK’s largest and most experienced team of part-time (we call it ‘fractional’) IT leaders. We work exclusively with ambitious organisations and we frequently help our clients use IT to beat their competition. Contact Us and we’ll be in touch for an informal conversation.