What’s Driving Your IT Budget in 2020?

By December 6, 2019 Blog, Insight

More and more companies are realizing the benefit that technology brings to their growth. No surprise there. And it makes perfect sense that experts predict that 2020 budget levels will keep pace with 2019 levels in spite of economic uncertainty. Technology is that vital.

We took a look at a study conducted by Spiceworks which says that budget drivers vary by company size and location. For example, “a greater priority placed on IT projects” is the top factor influencing IT budget growth in enterprises, likely because large organizations are typically better funded and have more resources to allocate against strategic initiatives than smaller businesses.

Plus, the more you’re managing in terms of data, departments, employee devices to connect, manage and secure, 25% of enterprises are also increasing IT spend due to a recent security incident, compared to only 4% of small businesses.

Across all company sizes surveyed in that study, budget highlights within each category include:

  • In hardware, budget allocations for laptops (17 percent), desktops (17 percent), servers (14 percent), and networking (8 percent) hardware top the list.
  • Top software budget allocations include operating systems (13 percent), industry-specific applications (11 percent), productivity suites (10 percent), and virtualization software (10 percent).
  • In hosted/cloud-based services, budget allocations for online productivity solutions (14 percent) top the list, followed by online backup/recovery (12 percent) and email hosting (10 percent).
  • Top budget allocations in managed IT services include managed hosting (13 percent), managed hardware support (11 percent), and managed storage/backup (11 percent).

 

So, what should you consider when developing your IT budget for 2020? What drivers should you pay attention to and which can you pass over this year? The critical thing to remember is that you should fund based on your company’s situation and not just do a cookie-cutter solution that may not fully support your strategic plans.

We’ve identified some components that we think are critical and should be considered when determining an IT budget:

Strategic objectives

One thing that we know is that the IT department plays a big role in reaching the strategic objectives of a company. It used to be that IT-supported whatever was defined as a goal of the business. Not that supporting the business was a lightweight effort, but executives are finally realizing that technology can be put to better use. Now technology and digital initiatives are at the forefront of company growth. Savvy business leaders understand the importance of IT as a growth leader and rely on the CIO and other tech leaders to take an active role in strategic business initiatives.

But before any growth heroics can occur, it’s important to define what you will need to accomplish regarding customer requirements and other objectives as they relate to business growth. For example, the IT budget may have to accommodate upgrades to meet critical objectives in the new year. At Calyx, we challenge everything, especially when it comes to customer growth. We’re not satisfied until strategies align with budgets because it’s only when viewing IT as an asset—not an expense—that businesses can accomplish growth objectives.

Technology lifecycles

The very nature of technology creates the need for change and updating on a regular schedule. That’s pretty much a fact of IT life. The average lifespan for a desktop computer is only three to five years. Servers start to decline in performance after about five years.

And you know this from personal experience—wireless devices have the shortest life spans of all at approximately 18 months. So when determining your 2020 IT budget, it’s a good idea to document each IT asset with its age so that you can project a replacement date and plan accordingly.

Current IT infrastructure and assets

What infrastructure is in place at your company today? What assets do you own? We’re talking hardware, software, servers, printers, network infrastructure, phone systems, mobile, desktop and other devices. Identifying your IT assets will help you develop an appropriate budget by listing everything at the beginning.

Keeping infrastructure current is projected to be the biggest IT challenge for companies in 2020. Businesses will need to address security best practices as well as incorporating a blend of onsite infrastructure and cloud-based services.

From our perspective, company size will also affect budgets for 2020. Small businesses will face security issues and disaster recovery solutions while large enterprises will be challenged when integrating technology innovations into their current tech environment.

Projected revenue

Any budget within the enterprise is contingent upon current and projected revenue for the business. No more, no less. Your IT budget will be contingent upon how much revenue is coming in today and how much is projected for 2020. Makes sense. But you need to account for the state of your revenue. If your business is in a rapid growth phase, you might have to increase normal funding to make sure your infrastructure can handle all the demands you’re going to place on it.

Experts predict that a large number of organizations will direct most of their 2020 budgets toward security and cloud initiatives. We agree that those are critical. But it’s also important to allocate portions of budgets to mobile initiatives, infrastructure upgrades, digitalization and staff training.

What’s our advice on what should drive your 2020 budget? Know your organization. What are your strategic plans for the new year? Be honest about the current state of your infrastructure. There’s nothing worse than not being able to support—let alone drive—business initiatives. But above all, stay strong on recommendations and continue to monitor IT support to grow your business.