Technology spending is estimated to reach $3.9T in IT in 2021. With that much investment into tech, it makes sense to have clear and measurable markers for calculating ROI.
Here are our top 8 tips to consider when setting a technology spending budget.
1. Establish a realistic technology spending budget: with minimum and maximum thresholds
No matter what you are buying, it is good to know how much you want to spend. Too quickly and too often, proposals and budgets get out of hand, and customers purchase products and services they weren’t sure they wanted. Establishing a budget with clear objectives and points is a great way to keep spending under control. Try to set realistic high and low ends, which are supported by research.
Techin5: Tech Spending
In this episode of Techin5, we discuss some benchmarks and strategies to use when planning or pricing a new IT project, as well as what to look for post-project.
2. Perform product research: look at competitors, features, price, and product longevity
There are tons of tech companies out there, all trying to sell the prettiest, shiniest new thing. But don’t get caught up in the glitz. Do your diligence in researching direct competitors and options which may be similar but with other features. Take some time to explore the market landscape, and use product comparison tools like G2, Gartner and Capterra. Of course, it’s also essential to consider the product’s pricing structure and longevity or sophistication.
Pro tip: Having a name-brand company work on your product can be comforting, but they may not be the best fit for your needs. Don’t just look at “Big Tech” names; sometimes, a smaller company can be just as good for less cost.
3. Look for strengths and weaknesses: consider technology features, implementation effort, support options, etc.
Once you’ve narrowed down to a few options, map out what makes the product unique vs. where it fails. Think about technical and functional features (which are typically the most fun) and consider how difficult or time-consuming the implementation will be. Seasoned tech buyers also know to evaluate how long the vendor company has been on the market. This avoids investing in a solution, only to turn around and do it all over again because it is out of business. Think about now, but also what’s in store for the future.
4. Plan for the future: consider how your business will change in the coming years, and if your preferred option will still be a strong technology solution as time passes
Although it may be hard to think past tomorrow when facing a problem today, you want to lift your gaze to the future when technology shopping. As your company is growing, you want the technology to be flexible with you. Consider the solution’s capabilities for needs outside of your current scope. While it’s impossible to satisfy every need now and in the future, the standard 80/20 rule applies. Solve for 80% of the needs and handle the “outliers” separately.
5. Budget for upfront and hidden technology implementation costs: make sure to ask plenty of questions!
Among the various reasons you will transition to the cloud, the cost is usually one. However, it’s frequently true that a technology transformation will cost more in the beginning. This is due to the upfront costs of design, procurement, and implementation. It may take a few months before you start to see some significant savings. Also, technology projects usually uncover hidden areas of need, a good implementation partner will bring these observations to your attention, so it’s a good idea to budget a little extra for those “just in case” scenarios. Make sure to ask lots of questions about the expected costs and potential unexpected costs.
6. Establish a reasonable timeline: consider pre-project planning, implementation, training and post-project resource allocation
Timing is everything. Planning for project kickoff includes many milestones to account for, starting with pre-project preparation. This “pre-planning” phase focuses on making sure you are going down the right path, making a product selection, and identifying/assigning resources. The project itself has its timeline, as does post-project wrap-up. Whether it is training, ongoing support, or adoption tasks, you need to allocate time for tasks that complete a project responsibly. Be realistic about how long it will take to complete the project, from first thought to last click.
7. Consider “product maturity”: future product support, “best practices” and industry standards
As technology advances, replacing outdated software or hardware is essential. Newer technologies address crucial issues such as security, meet new “best practices,” and/or comply with changes in Industry Standards. Failure to budget, plan and effectuate modernization can sometimes cost an organization a lot of money.
At the same time, if your chosen solution is not changing with the times, perhaps it’s time to deprecate it. Again, any successful organization will want to ensure they invest time and valuable employee time and effort into solutions and processes that enhance the global organizational goals.
Pro Tip: Ask the Big Tech companies when the end of support is for their products, especially on the older ones. That will give you a better idea of a timeline for you to start migrating.
8. Choose a qualified partner to engage with: consider their experience implementing in your industry
It is common to say that two heads are better than one, so you want to have an implementation partner who can help you go through the process. Having the right partner who understands your issues and the basics of the industry you are in will make a huge difference in getting that project on time and budget.
Pro tip: Don’t get caught up in awards and accolades. Although they look great on a website, understand whether these awards reflect good work or just good marketing. Also, partners will list competencies associated with different Big Tech, but that doesn’t mean they are fantastic. There are often requirements for partners to be a member of the Big Tech Partner Network, but everyone must do it. Make sure to ask questions about what those competencies mean.