The Optimized IT Budget: A Strategic Approach That Aligns Spending With Strategic Goals

The most successful IT budgets support overall business objectives. Learn the keys to an IT budget that meets long-term KPIs.

Your IT budget is the financial blueprint that guides critical infrastructure and operational decisions that support business success. Yet IT budgets are too often set to autopilot. Companies will adjust allocations as needed for infrastructure updates, expansions, or replacements, but year-over-year, budgets remain largely unchanged.

Read on for a more strategic IT budgeting approach that evolves over time and focuses on supporting business objectives and propelling long-term success. (Tip: It’s helpful to think of this budgeting strategy as circular rather than linear; this is an ongoing process that often requires circling back or adjustments along the way.)

Align Your IT Budget With Your Company’s Overall Business Goals

Are you clear on your organization’s top business objectives? If not, it’s time to connect with the full C-suite to clarify the primary objectives of your enterprise for the next year — and the next five. This will guide your IT budget and strategy. The IT decisions that matter most for a company, focused on improving operational efficiencies, will be distinct from those for a company most concerned about rolling out new applications, expanding into new markets, or enhancing customer experiences.

• Operational efficiencies may prompt a focus on automating tasks or integrating operational systems for more streamlined processes.
• New application development depends on continuous integration/continuous deployment (CI/CD) pipeline and a robust DevOps infrastructure.
• Better customer experiences may prompt a focus on the use of newer technologies (AI, K8, HPC, etc.) to bring new capabilities and services to maximize efficiency and experience.

The nuances and needs of your organization will vary based on your organization’s size, industry, customer expectations, compliance requirements, and other factors. You’ll also likely have multiple objectives. But the top goals will guide how you prioritize spending and measure results.

Audit the Current State of Your Organization

Many organizations start their IT budgeting process with a technology and application rationalization audit. Clarifying and understanding your current state will determine your actual alignment to business goals and expose any discrepancies. These nuances pinpoint where your infrastructure may not be aligned with the business and where you need to focus more attention. For example, outdated security technologies or missing multi-factor authentication tools will immediately jump out as pressing concerns during an audit for organizations prioritizing data security.

Conduct a Thorough Cost-Benefit Analysis for New Technologies and Upgrades

This process determines the ROI you can expect on IT resource allocation decisions over the near and long term. Yet again, your industry, enterprise size, and priorities will guide what you choose to analyze. Examples of cost-benefit focus areas include:

• Business continuity
• Higher short-term revenue
• Increased long-term profitability
• Sustainability
• Productivity
• Market competitiveness
• Security risk mitigation

Security and Data: A Priority for All Future-Focused Organizations

Though IT budgets are as unique as fingerprints, all organizations must prioritize security and data modernization. Data has become an asset that enables companies to harness cutting-edge technologies such as AI and analytics that, in turn, improve customer service and propel innovation. At the same time, companies must keep fast-growing data secure to maintain trust, meet compliance requirements, and reduce the risk of business disruption.

Modernizing your data infrastructure and strengthening your security posture are non-negotiables to stay competitive today.

Determine the Optimal Timeline for IT Investments and Transformation

At this point in your budgeting process, you should know where you require technology change and where maintaining the current state is acceptable (at least for this budget cycle). But what’s your ideal timeline? Organizations focused on increased application development and delivery in the second half of the next fiscal year, for example, will need to move fast to ensure their infrastructure can manage the increased workloads. Without adequate capacity, they risk app slowdowns and negative customer experiences that impact your brand.

Connect Your IT Budget With Clear OKRs and KPIs

Together, these metrics keep your IT strategy on track. Key performance indicators (KPIs) are umbrella goals such as increasing operational efficiencies by 10% in the next fiscal year. That’s a good goal, but you don’t want to wait until the end of that year to discover you didn’t meet the KPI.

That’s where Objectives and Key Results (OKRs) come in, providing helpful stepping-stones along the way. There may be two or three OKRs supporting the 10% efficiency improvement KPI example. One OKR could be implementing operation process automation by the end of the second quarter; another might be reducing operational costs by 3% each quarter.

By measuring OKR and KPI progress, you can see when you are on track and where you might need to adjust to meet goals for the coming year and the next five years.

Enlist IT Budget Strategy Support

The EchoStor team are IT budgeting and prioritization specialists who are laser-focused on organizational goals and measurable results. In partnership with us, you also access our technology expertise, pricing insights that improve cost efficiency, and perspectives on which technologies are all hype and which are essential drivers of long-term success.

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