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Infographic: 5 Steps to get Your IT Budget Under Control

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Freeman Clarke is the UK’s largest and most experienced team of part-time (we call it “fractional”) IT directors, CIOs and CTOs. We work exclusively with SME and mid-market organisations and we frequently help our use IT to beat their competition. Click Contact Us  and we’ll be in touch for an informal conversation.

 

 

 

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.

5 Steps to Get Your IT Budget Under Control

We meet some companies who are constantly banging their heads against a brick wall when it comes to their IT budgets. For them, IT spending feels unplanned, unwelcome and unproductive. The Board are frustrated and (guess what!) the IT team is frustrated as well! It feels like money is spent on the wrong things and IT rarely seems to deliver.

Here are 5 steps to get this situation under control.

1. Who’s on the Hook?
Serious businesses spend serious amounts of money on IT. A competent member of the senior team needs to understand the IT budget in detail, needs to take accountability for it and own its successful delivery. Too often, no-one around the Board table is really able to say for sure you’re not wasting money; not being ripped off by suppliers; but not under-investing either.

2. What’s the Strategy and ROI?
IT expenditure needs to be justified in terms of alignment with strategy and return on investment. In order to do this there needs to be a strategy and there needs to be a plan! All IT projects need to be mapped to business objectives; they need to be fully costed and efficiency savings or sales uplifts identified to allow sensible commercial decision-making.

3. What’s Normal?
Getting budgets under control is much easier when there is a consensus about what’s normal. Average spending on IT varies between sectors, company size, and other factors and benchmarking yourself against these averages can help create a consensus around what is normal and what your level of IT spend could and should be.

4. What’s Your Insource/outsource Strategy?
Outsourcing can be a good way to rationalise IT and save money but too often companies outsource the wrong things. Which aspects of IT are just commodities and which are core aspects of your business value? If you are making serious outsourcing decisions then go through a proper tendering process. And when you are keeping IT functions in house make sure the senior team are able and committed to managing them well.

5. Refresh & replace
Old kit needs replacing. It becomes unreliable, expensive to maintain and incompatible. You can pretend that’s not true, but then you will suffer these problems and have unbudgeted and unwelcome shock spends. Or you can agree a replacement policy and budget and plan on that basis. Setting and agreeing refresh and replace policies allows these decisions to become routine and budgeted well in advance. So these conversations no longer need to take up much time, and this creates time and energy to have proper discussions about how IT can really make a difference to the business.

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.

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Graeme Freeman
Co-Founder and Director

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