Establishing an IT Budget for a Small Business? 226
tirthas asks: "I am the Information Manager of a small (20 person) architecture firm and have recently been asked by my employer to prepare a technology spending budget. While I have a good handle on what I would like to spend vs. what I must spend, I am having some difficulty establishing a justifiable budgeting method. I have seen examples of 'per employee' methods and 'percentage of revenue' methods, but the dollars and percentages vary widely. What methods do you use to establish your departmental/company-wide budgets, what are your monetary amounts or percentages, and what successes or failures did you have in establishing your budgets?"
Keep it real (Score:5, Insightful)
Per employee and percentage of revenue are great metrics to meausre your technology spending against other companies, but I wouldn't use either of them as a budgeting tool.
As for getting a budget approved, may I recommend presenting things in a menu-like manner along with an explanation of the benefits of making the investment and thre risks of not making the investment. ~
Re:Keep it real (Score:2, Insightful)
Management likes nothing more than changing priorities, and helping them understand the ramifications of their decisions is critical to working well with them in the future.
Re:Keep it real (Score:2, Informative)
Re:Keep it real (Score:2)
Don't forget that as a corporation you can take a tax write-off on the value of the equipment. We amortize our equipment in 3 year cycles. For some stuff (such as your 400mhz server, where the OS and application load doesn't change) you can just let it go until it dies. But for stuff such as user PCs, the 3 year cycle is a good idea.
Don't forget to add in the extended warranty, which is totally cheap insurance should anything die in those 3 years... That's saved me a major headache many times already.
Re:Keep it real (Score:5, Informative)
Read about it here [pcworld.com].
If your company is profitable and paying ~25% taxes (number pulled out of my butt, I have no idea what the top tax rates are for corporations) you get to deduct the full purchase price the first year (for 25%) up to like a $100k cap, and again the next year when you donate it (for another 25% savings in taxes.)
Re:Keep it real (Score:2)
No shit...! Thanks for the link. I've got a truck-load of hardware to unload so I'll definitely take this into consideration (gee, and right around review-time too...!).
Thanks again.
Re:Keep it real (Score:3, Informative)
Read about it here.
OK, I read about it and the 8 year old piece of "news" says:
1) This only works for "only large companies" which was not defined, but the title of the article says "multi-million dollar" companies. The title of th
Re:Keep it real (Score:2)
Well, for the $100 or so I spend on a PC's 3-year warranty, it costs me twice that much in time and materials to replace the funky HDD.
I had a laptop with a borked CPU fan exhibit some rather odd behavior just two months ago (the system basically became unusable). Having the technician come out and effect the replacement was worth every stinking penny of that $100.
Chances are you probably won't need it. However, when you do, you'll recoup your costs many times over. For that reason it's cheap insuran
Re:Keep it real (Score:3, Informative)
Re:Keep it real (Score:3, Informative)
And extended warranties are rarely 'cheap' insurance, they are very lucrative insurance for sales assistants and insurance companies. As far as cost vs risk goes, extended warranties are rather expensive insurance.
Re:Keep it real (Score:2, Informative)
Re:Keep it real - and learn what is real (Score:2)
Metrics vary by industry, and by how agressively a company is going to grow (and use tech to grow
Re:Keep it real (Score:2)
Then 1-2 modest proposals of things you expect to keep things running well. Keep reasonable but don't underestimate your needs.
Lastly, propose 1-2 "pie in the Sky" budgets. Things you like but don't really expect. Make sure to have sound reasoning for each but, don't skimp. You will likely get a few items on the high end budget.
B
Re:Keep it real (Score:2)
In my experience, unless you have some very good justification why the larger budgets should be approved, if you take this approach, the approval amount will be your lowest proposed budget.
Furthermore, can you predict all the expenses that are likely? Are you sure you won't miss some?
If you have a bare-bones budget, you will still
Re:Keep it real (Score:4, Funny)
Don't forget support contracts (Score:2)
Linux for servers, Firebird for browsers, Thunderbird for email, Open Office maybe.
The only thing about Open Office is it does not exchange complex spreadsheets and or PowerPoint files well yet.
I have yet to see an open source cad system that is as useful as Autocad, Solidworks, or PRO/E.
I would stick with Closed Source accounting unless you really like accounting software or you can find a vendor of open source accounting sof
Re:Keep it real (Score:3, Insightful)
Different departments are going to have different needs. Accounts Recievable, for example can probably get away with a P2-200 if you want to make them feel ignored. marketing might use a Mac, or two, and the engineers are probably going to be most productive with reasonably up-to-date boxes (give the hand-me-downs to A-R with new disk drives).
The executives and upper management, of course, will need the latest and greatest game boxes. Don't give them X-Boxes. It'd be just too obvious.
Keep It Real... Simple (Score:5, Informative)
I imagine if you're in charge of administering most of the daily tasks (backup, network maintenance, upgrades), there is no labor cost. This makes it very easy for you.
I would put something together where you talk about the existing infrastructure, and maybe some proposed changes. Rank these changes in priority from "Low" (we can live without them but they MIGHT provide efficiencies) to "Medium" (realistically these will be needed, provide a good benefit for the investment) to "Musts" (these have to be done in the next 12 months otherwise the business will not function as it does today).
For example, "Low" might be buying larger, better displays for the office and a plasma TV for the client presentation room. "Medium" might be to buy larger, better displays for some of the drafting people, if the current ones are already a bit old or unreliable. "Musts" might be the monthly costs of internet/voice service (make sure they're not double- or triple-counting anything) or replacing a monitor that you KNOW will be gone within three months.
Also, make an approximate tally of the current value of items in the office, as far as IT is concerned. What if a file server went down? How much is the replacement? How much would a new bells-and-whistles replacement be?
I would probably draft up a "recommended" budget:
Recommended Budget: Medium
Then, above and beyond that, ESTIMATE the "Oh, crap" budget, for example:
Clearly spell out that the first part is "in your control" and the other part is BEYOND your control. You may find that the "in control" budget is $11,000, while the "beyond control" budget is $25,000. Or the "in control" budget is $35,000 and the "beyond control" budget is only $7,000. Approach each of these scenarios differently.
Once this is all done, write a half-page summary on the front page. One paragraph explaining the "in control" budget and a realistic range, plus the benefits. Then a second paragraph with the "Oh, crap" stuff.
I'm making the assumption that your employer wants to know the following:
Succesfully and accurately answering the first three questions will make the fourth one easy.
Re:Keep it real (Score:3, Insightful)
With any luck you'll still come in a little under budget and can trumpet that accomplishment at review time.
Re:Keep it real (Score:5, Interesting)
You need to itemize your budget into categories such as "Software purchases and maintenance", "Hardware", "Supplies", "Communications", "Training", and so on. Your first time making the budget, this will be an extremely tough process. Rely on reviewing the past years' spending and think of those purchases have not been made that should have (Think backup power, corporate antivirus solution, license audit, backup solution, workstation and server refreshes). This list can be quite long, depending on the company. Make sure you get buy off on this list by talking to all those involved and getting their approval in writing. As an example, make sure everyone is agreeing on the same software products so you don't get blindsided half way into the year by some $10,000 package that you weren't expecting another manager would require. You'll be held accountable for your department's spending compared to what was budgeted, so you absolutely MUST aim high on the estimated cost of everything, even more so on items that are tough to pinpoint the cost on. If there's something that has a fluctuating cost, look at a several year history to recognize growth and aim for the highest cost month at the current growth rate.
Make your proposal as simplified and easy to understand as possible. Leave out the techie stuff and tell him what he is going to get out of each item. For items that you know will be a tough sell, bring statistics and case studies of other, big name companies that use said item. When your boss sits down with you to review your proposal, you're going to have to fight for your budget. If he/she wants a more granular view into the proposal, give it to him. If he comments that certain items seem a little high, tell him that you put it a little high to give cushion and provide breathing room for unseen costs. During this process, fight for the things that are most important and give him victories on the smaller things. This way, you get the money for the things that matter most and if the boss comes to you later asking for something not so important, you can refer to the budget and ask what he wants bumped. If he backs out and drops his ad-hoc request, save that as ammo for the next budget review in case you need it. If your boss wants to give you an unreasonably low amount, you must set expectations and clarify the items that will have to be bumped from the review. If he's trying to give you your own budget, remind him that you're the one responsible for the budget and that responsibility cannot be given without also giving authority. Most people understand this line of reasoning and those that don't shouldn't be running a business and you're better off finding an employer that you can grow under. There are plenty of companies out there that would hire an experienced individual that puts a real effort into their job and stands behind what they bring to the company.
When the dust settles, there may be important items that got bumped due to the high costs in catching up to where your department should be at. Do NOT try and squeeze money out of other items to make room for those items that are being bumped early in the year. If crap hits the fan due to that item not being approved in the budget, it's not your fault and your boss made the decision on his own knowing the possible consequences as you explained them. On the other hand, if you get to Q3 and have a little extra money, you'll be in a much better position to purchase that item as a bonus and sleep comfortably knowing that you'll still make budget. Keep in mind though that you'll rarely find yourself getting more breathing room on your budget as the year progresses, so don't count on this happening.
This process may at
Return On Investment (Score:3, Interesting)
Of course, quantifing things like worker productivity, morale, and community image can be hard, but you can make a good go at it. Look at how much time people spend waiting for the computer, bitching about the computer, or otherwise Not Getting Stuff Done Because Of The
Can't give you the entire budget (Score:3, Funny)
First, create a "consulting" line item in your budget.
Second, put $20 million in the consulting budget for next year.
Third, hire me as your consultant for one year.
Fourth, at the end of that year, I'll tell you how to budget your IT operations.
Re:Can't give you the entire budget (Score:2)
Re:Can't give you the entire budget (Score:2)
You're right. I'll do it for $40 Million.
No..that's how it's done: (Score:2)
- 2 millions for me
- 2 millions for the guy needing the budget for giving me the contract
- 1 million for TurdTapper to do the work
Hey, if it works for Halliburton, it will work for us..
1% of your gross business... (Score:2, Insightful)
Re:1% of your gross business... (Score:2, Insightful)
Seek assistance (Score:5, Informative)
I'll need to know the current technological state of your company. How close to capacity is your IT dept running, both in manpower and equipment/services? What are your company's growth expecations over the next two years? 5-10 years? In what role does your company see the IT department, cost center or profit center? In the case of the former, how might we turn that around? How does your utilization of technology come to others in your industry? Etc, etc...
Take the sound bites that you're going to get here with a grain of salt. You're going to need answers that are specific to your business itself. I know it's probably not what you want to hear, but you really should call in some outside help so you can learn how to do it right. Patching together piecemeal advice might cost you your job in the end.
Re:Seek assistance (Score:2, Funny)
We can provide salt that has "five nines" availability with N+1 redundant grains. We have been a Sodium Chloride E-Solution provider and integrator since 1996. We also provide consulting to smooth your transition from obsolete grains using our trademarked "iDesalinization" method. Call us today!
Re:Seek assistance (Score:2)
Awesome! (Score:2)
couch cushion economics. (Score:2, Funny)
Or is that too small a business?
Brute force (Score:3, Interesting)
Re:Brute force (Score:2)
So you can pad the budget.
I recommend getting the bosses really drunk before presenting the budget to them and getting them to sign off on it.
Re:Brute force (Score:2)
You get to decide how much is the minimum though.
Re:Brute force (Score:2)
Chicken Blood budget (Score:3, Funny)
Re:Chicken Blood budget (Score:2)
Re:Chicken Blood budget (Score:2)
You mean the ones which Microsoft says will be out 'real soon now' or 'in the next major release of Windows'?
You'll also need some penguin blood with that black magic if you think you're going to use OSS and/or GNU/Linux without knowing anything but Windows. Well,
Re:Chicken Blood budget (Score:2)
This is just FUD that Microsoft trots out whenever they want the TCO numbers to come out favoring Windows! Everyone knows that penguin blood is much more expensive than chicken blood. Of course, what they won't tell you is that chicken blood works just fine for Linux servers, too. Don't believe me? Try it.
Of course, Linux admins still cost more than Window
Re:Chicken Blood budget (Score:2)
I would laugh at them, stop for a moment and stare at them, then laugh at them even harder.
Later on you might consider devoting your life to actually building it (in whatever environ
Useful info (Score:2)
Granted, this does include everything from the electricity cost to paying the janitor to dust the monitor once a week but the fact remains that the bulk of that $2k is still hardware/software/admin costs. (I think $1700? Anybody have a link?)
Budget? What Budget? (Score:5, Insightful)
Re:Budget? What Budget? (Score:3, Insightful)
Re:Budget? What Budget? (Score:2)
Not knowing where the money will come from shouldn't stop one from knowing ahead of time what will be needed and budgeting for it. If cash is a big variable, then your budget has to be more flexible and perhaps conservative. I don't understand how your management can tell h
My normal method (Score:2)
Method #1: "Give me $xxx by this date, or our cash registers will go offline until you do."
Method #2: "Give me $yyy by this date, or I'll cry like a little sissy girl until you do."
Unfortunately, I've never had the opportunity to use Method #3: "Give me $x,xxx,xxx or you won't be able to download any more porn."
Though I know someone who has.
Are you the guy they hired to do CAD? (Score:3, Insightful)
That's an important question, because if they've actually hired you to be ``Information Manager'', they're going to have entirely different expectations than if they've hired you to be a draftsman and dumped this extra responsibility on you.
If you're a draftsman with an extra burden, I recommend that you look for the thing(s) which will let you solve a few small problems, give you no new problems, and not waste any of your time on adminstration. Find the price tag, and you have your budget. If the number is too small, new machines all around (or, just for the partners and their favorites, and let their old machines trickle down). You can't afford to neglect the one part of your job they understand (the drafting), so don't let yourself get trapped in system administration!
If you were hired to be a full time IT manager, why are you asking us for advice? Figure out what they need, tell them what it costs and how it will save costs and increase revenues. You do know how to do that, right?
Re:Are you the guy they hired to do CAD? (Score:2)
next thing you know, he's asking
o
You already answered your own question (Score:2)
Screw the methodologies, per capita expendature, that's generated after the fact.
You said you already have an idea of what you must spend. Create an itemized list into a spreadsheet. This is the mininum operational cost, keep this list secret. Then take an itemized list of what you want to spend, put that into another spreadsheet. Your realistic budget will probably be somewhere between the two.
Keep it real (Score:2, Interesting)
What we do is just sit down and assess who needs new computers that year. How much you spent last year on incidentals (CD's, cables, RAM, etc).
A rough guess is to add 20% to what you have down on paper. Of course you can only make an accurate budget knowing your past spending habits and what things are on the horizon.
One thing of note. I worked for a big hospital a few ye
Value (Score:2)
What is the value of the projects that flow through your computer system?
What is the cost of replacing all of your data, while on deadline for a project?
What could a total system failure cost the company, if it happened at the worst possible moment?
Based on your answers to the first three questions, would you mind if we spend 4% of the potential losses on a reliable computer system?
I'm in the same type of position and industry... (Score:3, Insightful)
I'm the sole IT person in a 50-person architecture/construction management firm. Our spending varies year-to-year but there are a certain amount of annual expenditures. Things like antivirus software (both at the server and desktop level, CAD upgrades (we stagger our and are getting onto Autodesk subscription... it hurts in the beginning but pays off after a couple of years).
I do my best to save on the software side and apply the savings to better hardware. By this I don't mean go out and pirate what you can't afford, I mean look for OSS alternatives to things you may think are a must-buy. I run sendmail with Mailscanner/spamassassin on FreeBSD and linux, instead of Exchange. I run supplemental Samba servers on quality HP servers. I do run a windows domain, because its just easier for me to manage than a Samba-based domain. Believe or not, MS stuff just works in my organization. Our industry-specific accounting software is windows-only also, so we're kind of stuck there.
Like someone before said, you need to take into account your corporate growth goals and decide if you want to invest in a lot of good hardware that should last a long time, or buy cheap initially and replace things when needed.
Re:I'm in the same type of position and industry.. (Score:2)
Their reasoning behind this was pretty sound--Autodesk EOLed acad2000 based products in january of this year. That means no support and (worse yet from a financial standpoint) acad2000 products no longer qualify for up
Work out what your business does first (Score:3, Interesting)
I have done this for myself (started back in 01/2003) and also for clients (as a side) and to be honest, for a small business like you talk about, there is not really an IT budget. The point is to spend only exactly what you need to do the job, and if additional benefits can be realised for no extra cash, then that is a bonus.
Dont Forget (Score:3, Insightful)
Do careful planning and always have a back-up plan. What happens if the vendor you bought software product X from goes bust - what happens to your support?
Re:Dont Forget (Score:2)
Business Strategy (Score:5, Insightful)
Don't stop with PC's and applications. Include phones, Internet access, printers, faxes, document repositories, paper, toner, CD's, you name it. If the business strategy is best supported by quill pens and parchment paper, though, don't be afraid to go low-tech.
The partners probably have an idea of how much they want to spend on you, your team, and what you and your team do. Find out.
Do not trifle with that step. If they think they can afford $30,000 a year on technology and you present a $300,000 budget, the next sound you hear will be the axe falling.
Never forget that your firm is in the business of architecting things. Having cool computers with the latest applications that do not contribute directly and measurably to the architecting of things is deadly.
Re:Business Strategy (Score:2)
LoB
Keep It Simple? (Score:2)
1. Write down the sum of your IT department salaries.
2. Write down all of the hardware upgrades/purchases you expect to have in the next year.
3. Write down all the software purchases and licenses you expect to get in the next year.
4. Write down all the service contracts you currently pay for.
5. Write down all of the fun stuff you'd like to purchase in the next year (VOIP,
Best method (Score:5, Insightful)
First, ignore all the per-capita methods. They won't work.
Now, take your lists of what you need to spend and what you want to spend. Lay out the items, give each one a priority ranging from "must have" to "would be nice". Provide a justification for each one and for the priority you gave it. Give all justifications, not just the best one, with examples from reality (eg. the justification for the anti-virus software might make reference to actual virus infestations in the company in the previous year and how much they cost in money, time and resources). Be sure to account for recurring costs in future years (eg. the service contracts on equipment, anti-virus update services, etc.).
Once you've got your list, sit down with the Finance guys and figure out how far down the list the business can afford to go.
Realistic budgets aren't based on per-capita expenditures or percentages of revenues or profits, they're based on what the business actually needs to spend to stay in business.
Ask the controller for the standard (Score:3, Insightful)
Re:Ask the controller for the standard (Score:3, Insightful)
May I suggest... (Score:2)
Unless of course you need to connect to a Novell Server or what to use Exchange (well there is always Entourage, but it's not that good), but then we have to ask why are you using both of those since most small business
Re:May I suggest... (Score:2)
First, there is no such thing as a "Novell Server" as a specific product. You can buy a Novell Netware OS, a Novell SUSE Linux variant, or Open Enterprise Server (with either a Netware kernel or a Linux kernel). Second, Novell sell per seat licenses in ad
Re:May I suggest... (Score:2)
Talk to the users first (Score:2)
Instant Strategy (Score:5, Insightful)
1. Review the Business Plan. What does it tell you? You expanding? You going all e-business? What? Wishes as well as reality.
2. What about trends in the architecture world? Trends in technology? Cheap storage, cheap bandwidth etc?
--> Try to work out what capabilities are suggested by all of this. eg - if your firm says they want to go e-billing then, hey, thats a capability. Show these to your firm and get them to rank them, score them whatever.
3. You haven't just started up, I suppose, so how does your current IT match up? Do a big list of capabilities you have identified and assess each one against your current apps/functionality.
4. What would a future IT system look like if it were to deliver all these capabilities? How could you leverage some of the technology trends you identified in to creating growth or profit? (invoices by pdf = save on printing and mailing etc. Recruit new staff just via the web = savings etc )
5. Can you decribe an optimal IT applications and technology architecture yet? Would that be an open accessable database feeding billing, web portal, collaboration, etc? Web based? Accesible in the move, laptops etc?
6. Now do a gap analysis of what you have versus what you want. Describe how you could move between those two states. Ie projects, dependencies etc - migrate this database, use a temporary TS server, then move to app x etc etc. remember culture (saving local vs contributing centrally - loss of power for the individual) - have a plan for selling culture changes too.
7. How could you pay for this - what levels of investment would it take? How will the changes be paced - what happens this year and what next. Will there be an investment phase of a few years then a leveling out. Talk business cases here - ROI.
8. Map the risks and critical success factors. Map your communications plan for the changes.
9. Present. You now know exactly what you want, why you want it and in terms that the rest of your staff team will understand - they nedd the capabilities not the software itself. Easy sell really.
We go though this every few years and it is an effective enough methodology.
simple calculations: (Score:2, Funny)
(Support staff salaries) + (# of PCs hardware cost) + ($699.00 per user to SCO) = your budget.
This shows half of ITs problem. (Score:3, Informative)
First, you need to get a handle on what you're employer actually expects out of it's information systems. Some firms want a glorified typewriter, some want it to do most everything. Some can't stand spending a dime on a machine, others only want the latest and greatest. Guaging the culture of an organisation is paramount.
Then there's risk. This is, IMHO, the biggest factor in actual budgeting. How much risk to the companies bottom line will any expendatures entail? How much risk is involved with doing nothing? How much risk is involved in your compeditors advancing further in IT efficiencies? You need to show that what you intend to spend will protect current operations, or there won't be a budget for anything, let alone IT. As well, if you can show that there's significant risk in not spending a certain amount, most CxO types will approve what you're asking for.
Then you can get into the numbers, and justify your expendetures with ROI.
OK, the problem? My experience lately has been that professionalism is sorely lacking in a lot of IT departments. I've heard people lament "They're driving the company into the ground anyway - why should I care?", or justify an over priced solution on what other departments get, while bitching about how under appreciated the IT department is. Your department is under appreciated because it isn't communicating properly with the people you serve. It's that simple.
We techies tend to look down on business users (they are just lusers, after all), but they're the people who drive the ship. How they're driving it should not matter one whit to you effectively doing your job. Hell, maybe some information that your systems provide will turn into a cluebat and wake up a sleeping bridge. You need to think a bit like them in order to effecitvely communicate what you're trying to do and why. You need to use thier terms and jargon, even the (YECH) buzzwords. This seems to be anethemia to a significant portion of the Slashdot crowd.
A professional, when he accepts a job, will do what's right for his customer within his area of expertise, no matter his own personal opinion on the customer or the customers direction.
Soko
The "how to do my job" askslashdot question (Score:2)
I'm sorry, but there is no way anyone can help here without the usual "more info" help. I don't know how much money your firm has to begin with, I don't know how much, if any need there is for an IT department.
So, I'll give generic advice to a generic question:
When in doubt, ask for much more than they will be willing to spend, and odds are you will get more $$$ than asking for what you really need. Basic psychology.
Seriously? (Score:4, Insightful)
look at previous years budgets/expenses (Score:2)
You're going to have a difficult time justifying someone elses budget if you just go by what "others" say and do. And for goodness sake, incl
"Magic" Formulas aren't the Answer (Score:2)
You can use a previous budget, or actual expenditure figures, plus a "wish list" of new stuff. The point is just to make sure you have a complete list of the things you're going to need
Here's what I do (Score:5, Insightful)
I'm the sysadmin at a ~25 person architecture firm, and an architect, too.
What I do for budgetting is to start with an inventory of every piece of equipment we own. Then I assign an approximate lifespan to each thing, based on experience. Couple that with when each item was purchased, and replacement times and potential budgetting scenarios start to emerge. There are a couple of policies I try to wedge in there to steer purchases, such as I like to put the new machines in front of the heaviest, most demanding users, which for us is the more billable staff. I'm forunate in that I have management's backing, so that there's never any whining from project managers when an intern gets a kick ass machine, and the PM gets the hand-me-down. By keeping the machines coming in, I can keep everyone pretty happy. In addition, whenever possible, I try to upgrade our software versions either every two or three years, on everything except the Microsoft hegemony, which I only upgrade through churn of new workstations.
Around the fairly regular annual purchases, I then stategize the big ticket items: new plotter, Autocad updates, expanding licenses of Photoshop/InDesign, implementation of a new accoutning system, or what-have-you. This helps even out the costs from year to year. None of it's rocket science; you just have to put your head into it and figure out what it would cost to maintain your company's current level of technical prowess (x machines per year, etc), and that what it would cost to further develop the skillsets (by getting new software, and doing more training).
FWIW, we spend ~$45k per year, which works out to be ~2.5 - 3.5 % of revenue. My bosses have never gone for a straight percentage method, but it's my preference, since it automatically adjusts itself for good times and bad. Instead, I develop a budget, they either say yes to the whole thing, or specifically exclude one or more items. Then I establish the priorities and give them an idea of at what points in the year I'd like to spend money. They coordinate that with the company's cash flow, and if the year turns sour, I just get reigned in on my spending.
Sorry if I'm rambling too much. OTOH, if you want more, post a response, and I'll give you my email address.
Joel
Re:Here's what I do (Score:2)
FWIW, we spend ~$45k per year, which works out to be ~2.5 - 3.5 % of revenue.
That's equivalently about $2K/person/year for the complete IT infrastructure, which is another way to derive a bottom line for purposes of cost management. Both ways are useful, but for different reasons.
If you doubled the number of employees, a rough prediction would be to double this cost as well. You'd get some economies of scale, but you mig
Re:Here's what I do (Score:2)
The other big problem is plotters. There is a huge range of what companies have, but if you have 12 architects/designers/CAD people the plotting equation is tricky. We lease and bill back plots to projects. Without the kickbacks it would be a stupid move, but it moves the money between projects and as overhead.
I'm in an engineering shop (M&E), and I would put
Re:Here's what I do (Score:2)
General IT budgets average around ~3% of revenue. Some companies are higher and some are lower, but its a good ball park.
---
I am an IT manager with a background in architecture. I have done budgets ranging from several million up to 50M.
I previously worked in various architecture and design firms, large and small:
Lease your equipment.
Here is why:
Your a 20 person firm and you may have a dual role as CAD manager/drafter/arch and IT guy. CAD programs (like autocad) do progress (albeit
get requirements (Score:2)
Figure out WHAT THE WORKERS NEED, and how to give it to them. Then figure out how much it costs in a variety of scenarios. Use the one that is most futureproof, and multiply the figure by 1.33 and use that as your budget request. (the 1.33 is because nothing works right the first time)
You should qualify this by filtering out... (Score:2, Informative)
You want responses from people who understand the small professional services firm.
My experience as an IT fence sitter in a small professional service firm is that if you were to recommend it, as the expert in the firm, the principals will be willing to pay for it.
I would simply make a list of your expected needs and spread it out over the best time periods to implement the changes.
If your owners are "cheap," don't try and be
Models and size (Score:2)
In other words, to paraphrase an earlier poster, you can use "Cost per square foot" for building a home, and the larger the home, the more accurate the average.
But if you are specifically building, say, a bathroom, you can't use that metric accurately.
The best way to do it is, as others have suggested, "lay out what you need to get" and factor in your assumptions (replacement machines for old desktops, replacement printers, etc.).
Don
Opportunity cost (Score:2)
Your company should spend on whatever will give it the highest return. If that happens to be IT, then spend on IT. If there is a better place to put the money, put it there.
You talk about trying to find a justifiable method. The best justif
Go With What's Proven (Score:2)
If you're on foreign turf and don't know your way around then go with what generally works for others. There are usually government agencies that provide templates.
If you're developing a budget then remember to develop it with an eye to your banker. A fubar budget cobbled together by a non accountant is not going to please your banker, your tax accountant, the tax dept...etc.
Good, Better, Best (Score:2)
Good is the bare minimum, it's a throw away solution intended to just get us by while spending the minimum amount of money to get the job done.
Better is a solution that may not be "best-of-breed", but will scale and won't be trashed as soon as our needs/requirements change. It's what I always shoot for when asking for budget kn
... from my experience ... (Score:2)
Per-user costing is not a consistent indicator of what the costs really are. For example, your developers, while they'll require fast workstations and any number of different productivity tools (IDEs, merge tools, repositories, other 3rd party products, etc.), won't be actually taxing the infrast
My experience with IT budgets (Score:2)
Some things you might consider:
-- All the good advice above about inventory.
-- Depreciation schedules you can live with. I am amazed how many accountants still think computers are good for 5 years.
-- Consider leasing software. Many will disagree with me for very valid reasons. Software leasing (most are 12 or 24 months) work well for our business. They give me software num
Per seat I suggest (Score:2)
Hardware choices should not be made totally by IT (Score:3, Insightful)
Based on what tools people are given they will find different ways to work. In the most basic example, give them laptops and they will work in groups but also from home more. Give them desktops and they will come in but perhaps not be flexible enough. This applies to quite a few hardware and software purchese. When you save $1000 dollars by giving the two sales guys slower machines are you saying they are not as important as the 20 developers? Perhaps you should just spend the extra $1000...or perhaps not.
I only suggest you keep in mind that even decisions that seem totally IT or budget based can have wider implications.
Someone at a management level should be thinking though these questions as part of this process.
the simplest rule to follow (Score:3, Insightful)
So, for any item you would like to have, (I didn't say "have to have") you need to put together a simple description of the item. Explain in plain terms what it does, this will help the people that have half a clue. Then spell out how this item will save money or make money, in simple terms. (go on the assumption that what you have just told them is ALL they know about the item at this point) Explain how long the item will last, and how long it will take to break even. Explain how much money you roughly estimate the item will make your company over its lifespan, factoring in its initial cost and the cost of updates, maintenance, etc. Don't cut corners on the future costs - they need to know if you have to buy a new license for the software every year or renew a service contract.
Do this for anything you would like to have. Do not restrict yourself to things you think you will get, or just the things you find essential. Include it all. They are unlikely to approve everything, so there is no sense in being picky about what you ask for - you can't get what you didn't ask for. You might drop a hint to the reviewers when you hand it in, giving them a hint as to how much of this you expect to be approved. This will ease tensions as they may still not understand how much of this you need and how much you want. If you tell them you're hoping to get at least 50% of what's on the list, they won't freak out trying to figure out where they're going to get budget to get 95% of your list. (this usually leads to you getting a completely random assortment)
Depending on who's evaluating the list, it may also be useful to break the items down into groups. "Essentials", things we need to get to stop hemoraging money. "Needs", things we need to become more proffitable, improve efficiency, improve customer response time, etc. "Try-outs", things we'd like to get into and we're looking for a sample of the technology to see if it's worth a buy-in. "Extras", things we strictly don't need, but that may have a positive effect on the company... these can include things that simply make employees' jobs easier to do or more tolerable. (how about a radio for the mailroom?) If they're short on cash they may very well go entirely on this grouping to determine what they get - maybe they only get the essentials and the needs this year.
This does a lot for you. It stops them from buying stupid things you don't really need rather than the things you had to have yesterday. It also helps them to make informed decisions about what they should buy and what can wait until next year or next quarter. And it helps you because you can push the tech in the direction you are prepared to go rather than getting a spray of differnt items which could take your people in three different directions at once. You are their only source of information right now and what you tell them is very important to your business. You aren't actually the one spending the money, but they are depending on your professional opinion right now to spend that money where it counts. What you tell them will determine the direction your I.T. goes for the next 10 months.
Fire the information manager (Score:2, Insightful)
Unless the information manager is only doing information management 2 or 3 hours a week, I would say it is useless for such a small company to have one on staff. If the company has such a strange spending pattern that spending on other things actually outweighs hiring an information manager, then you're not doing your job; and if you are doing your job, your job is redundant.
budget = how may seats of autocad... (Score:3, Insightful)
at the end of the day it's a head/seat count for hardware and software. i usually count on at least 1 major upgrade a year which i'll be asked to purchase at a cost of 30-70% of original cost, plus 1-2 major bug fixes, and 1-6 minor fixes at little to no charge, regardless of software. i also expect production hardware to be replaced(desktop computers, large format plotters, centralized workgroup laser printers, color copiers) every 3 years, and system hardware(servers, raid storage, network equipment, tape jukeboxes, server archive software, other server software) to be replaced every 5 years.
of course YMMV in your particular scene, so don't ask your boss to replace a bunch of gear if he's a cheapskate. pose every need as exactly that, a need. we can't do our presentations WITHOUT photoshop CS2, we NEED to upgrade 10 copies of autocad to version 2006 our senior architect is complaining that his BOOTLEG copy of version 14 is taking a long time to launch, our HP5000 is breaking down and the cost or repair is MORE that a years worth of lease payments, if we don't buy X copies of Y software, one of our disgruntal former employees will drop a dime on us and call the SPA or BSA, so here's a schedule for how to get legit in the next 3 years... you get the picture... if you can't buy it this year, schedule it for next year, unless it's a break fix.
Re:Find the right balance (Score:4, Insightful)
There is a point to this (honest): IT often has to play in cost-benefit analysis against other corporate budgets, including facilities.
Re:Find the right balance (Score:2)
Re:Find the right balance (Score:2)
Other gains of LCD screens (Score:5, Insightful)
Think about it. What I do all day is mostly send e-mails and work in Microsoft Office. A traditional 'upgrade' would be to drop a new, faster computer with a big hard drive on my desk. But not only does that take a lot of work on behalf of IT, not only is it incredibly disruptive to my workday, but it doesn't really benefit me at all. I can probably store my entire work folder and all its accumulated contents since I began working here on a single USB keychain drive. My CPU needs were met and exceeded some generations of hardware ago.
On the other hand, a new LCD screen that's crisp, clear, and easy to read -- as opposed to some legacy, piece of junk CRT that's been getting blurrier and dimmer for years -- is something tangible that I look at and notice day in and day out. You might think it doesn't result in an increase in productivity, but I disagree completely. In fact, if someone had given me the choice between the monitor and a new CPU, I would have taken the monitor in a second.
Re:Find the right balance (Score:2)
On the other hand you should turn off your monitor (whether it is an LCD or a CRT) when you are done for the day; this extends the monitor's life because things that produce light have a tendency to burn out after X
Re:Find the right balance (Score:2)
17" LCDs are $250, but 21" flat-screen Trinitron tube CRTs can be gotten for around $100.
I would VERY, VERY much prefer the big honkin' dinosaur with more screen real estate, more vibrant colors and a lower cost. The only disadvantage is it's size and power consumption
Re:Find the right balance (Score:2)
Besides, 99% of office users use apps like web/Office/email, not Photoshop. So the slightly less accurate colors won't matter a whit to them.
Re:Find the right balance (Score:2)
LoB
Re:Rules of Thumb Usually Don't Work (Score:2)
It'll always cost you more then you expect.
--LWM
Re:Outsource! (Score:2, Insightful)
This is from the perspective of an IT geek in a (i'd call it a small company as little as 4 years ago) medium size company. Of course I'd like to take all the credit for the company's growth--many others contributed significantly in their own areas of responsibility.
The problem with consulting is that managers tend to look at IT spending as buying a commodity. Spend more, and you will get more of this stuff called IT. Consultants make it easy for managers to not have to understand how IT impacts business pr