For many nonprofits, having the resources available to hire a CIO isn't possible. Unfortunately, this causes the task of budgeting IT to land on the shoulders of an executive, that may not have the necessary expertise to make these important decisions. Luckily, Tech Impact is here to walk you through everything you need to ask yourself when budgeting IT for the year. And even better, we ensure that nonprofits receive every software and product discount available.
Set up budget contingencies and anticipate arguments
By their very nature, budgets are an exercise in compromise. The first rule of thumb for anyone who is creating a budget is that you will not get everything you ask for. Your CIO should enter budget meetings with a 'best case' scenario that presents maximum IT spend options. They do this because they know they will be asked to reduce their budget. Their hope is that the final IT budget will actually align with what they realistically expect.
Collaborate with stakeholders before budgets are presented for review
Today, nonprofits recognize that IT is an facilitator for strategies and operations, so best-of-breed CIOs actively collaborate on the technology budget with end users. These end users can be vital allies in budgetary reviews (for example, the Marketing VP can join the CIO in arguing the importance of establishing an analytics program for sales and market forecasts).
Gain a working knowledge of finance
To argue budgets with the CFO, strong CIOs understand the balance sheet and income statement ramifications of IT investments based upon how they are expensed (capital, longer-term investments that are amortized or operational expenses that are totally expensed within the year's operating budget).
Revisit aging assets
Making sure your house is in order is part of any budgetary process. What aging assets are coming off depreciation schedules? Will this have a favorable impact on budget formation? If these assets are coming off the books, do they also need to be replaced? Most IT departments keep track of the large assets -- but the tracking of old PCs, printers, and other equipment that might be collecting dust in the IT backroom or in remote sales offices, is often overlooked.
Determine whether expenses are operational or discretionary
Energy costs for the data center, lease expenses, and to a degree, core IT staff, are all ongoing operating expenses that the IT budget carries year after year. Then there is the discretionary part of the budget: the projects that are approved one by one, and that upon approval begin to incur costs for staffing, outside training/consulting, equipment, software, and so on. In formulating the budget, many CIOs first determine what the baseline of expenditures will be, and what portion of the IT budget should be projected for either budget approval or disapproval. In cases where project work is vital, CIOs are aggressive and ask for funding that starts on day one of the new budget. For lower-priority projects, the choice is often to defer project work until a call can be made later in the budget year.