6 common IT budget blunders
With costs and taxes increasing, every CEO is taking a hard look at the bottom line. Here’s what to look out for in your IT budget – and you don’t need any technical expertise to identify these mistakes and correct them.
1. No IT strategy or planning.
If you lack an IT strategy, ‘the IT guys’ will come up with a new way to spend money every week. And no clear planning means that everything is an unwelcome surprise. Every IT spend needs to directly support your business goals, and you should always have plans in place to address any potential problems, such as a cyberattack.
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! Unfortunately, these goals do not support your own. So don’t talk to suppliers without understanding what you want to achieve and why you’re talking to them. And 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 or stuck projects.
A seriously overrunning project can torpedo your IT budget. The same goes when an IT project gets stuck. And the most common causes of such 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. If this sounds painfully familiar, it may be time for a fractional IT leader.
4. 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. And let the supplier know that you’re doing that – you may magically see prices falling and service levels improving.
5. Buying products you don’t need or can’t use.
It’s amazing but true: we see plenty of clients who’ve spent money on things they don’t use. 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 KPIs.
Spending money without checking you got 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. For more advice, see our CEO’s briefing on creating an IT platform for growth.
