by Mike Mosley

Created on: January 19, 2009   Last Updated: January 27, 2009

Tips for Justifying Your IT Budget

All businesses are trying to cut costs in these trying economic times. It is important that you view your budget as a way to assist the company in this process as well as generating revenue for the company. A good IT strategy will allow a company to lower costs in other areas, increase productivity, and allow scalability for growth. Keep in mind that ulitmately the business needs to operate as if it is going to suceed. Do not plan or pitch ideas that work along the idea of failure.

1. Productivity. Old or slow equipment and software will hurt productivity. While it may seem that spending 20,000 dollars on new servers or terminals when the old equipment is functioning may seem like a lost of revenue, it is very possible the amount of extra productivity that you can get from better equipment will allow a decrease in labor. Be sure to be able to justify this savings in terms of real dollars. A perfect example of this is a collection job I worked before I went into IT. It was a major reason I went into this field. We used a piece of software to serve records to us for each collection account. However, it took about 10-20 seconds for each record to cycle. I would work an average of 150 accts a day. That means i wasted 25 minutes a day just waiting for the next record. Thats 2.5 hours a week of lost labor per employee. With 20 employees in this particular office it worked out to 2600 hours of lost labor each year. Thats about 16,000 dollars. Not to mention the extra revenue that would have been generated by being able to work more accts.

2. Electrical costs. Replacing older equipment can save companies a fortune in energy expenses. Never servers are designed to be much more efficient than older ones, especially blade servers. Remeber watts - volts * amps. You can calculate the wattage your server is using now and what a new server would use and put the cost in real dollars. Keep in mind to justify savings over the life of the equipment. If the server you are getting is a 5 year solution, than express the savings for 5 years.

3. Data Value. The value of the information that is stored on computers and passes through computers is quantifiable. How much money would it cost to reproduce the information that is being backed up. Labor cost * hours. Is the data even replaceable? Would the company be irrepairably damaged if the information was lost? Data loss has wiped out lots of businesses. Be sure to explain exactly how much data the company

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