Planning Your IT Budget For 2021

The Outlook For 2021

2020 has been an enormously challenging year for SMEs, with the ongoing and long-term effects of the COVID-19 pandemic. Unfortunately, these ongoing ripples promise to continue making running a business challenging in 2021.

Per the 2021 State of IT report by SWZD, based on a survey taken of 1 073 IT buyers in North America and Europe, 17% of businesses expect IT budget declines for 2021. This figure has more than doubled from the 8% of businesses that had expected their IT budgets to decline before the COVID-19 pandemic hit. Conversely, TechRepublic reports that 26% of businesses surveyed indicated that they’ll be spending more on remote technologies that enable employees to work from home, with 22% of respondents reporting that they’ll also be spending more on IT and network security to allow remote work to continue securely. Whatever the case in your business, an IT budget is a helpful tool.

The expected increases in expenditure on certain technologies and security features could imply a higher total IT spend, but the reality is that businesses have had to tighten their belts and their budgets overall, owing to financial losses or poorer than projected financial performance in 2020. As a result, IT managers and business owners now have to work smarter within their IT budgets.

To that end, we would like to give you some practical advice on structuring your IT budget for 2021, based on what we have learnt from 2020, to ensure you are adequately prepared for the challenges the new year will bring.

How to Structure Your IT Budget for 2021

• Reviewing: Conduct a review and comparison of your 2020 IT budget and your 2019 IT expenditure to ensure you have an accurate picture of how you typically spend on your IT.
• Amending: A realistic review of your previous IT budgets and expenditure will give you an idea of where you can trim your budget. For example, one way in which to cut costs and increase security is to consider migrating to the cloud, automating certain IT processes to capital expenses and ongoing costs, improve security, and better enable remote work.
• Expanding: You’ll likely need to make provision for the continued requirement of remote work for a number of your employees throughout 2021. Carefully consider the costs associated with remote work – you do not want to skimp on the technologies required for your employees to function effectively or on the higher IT security risks associated with remote work.
• Sharing: Leaders should provide their direct reports with a clear outline of what exactly they can spend on training, software, and other IT-associated costs. Businesses tend to try to keep their budgets a secret but being upfront about your IT budget for 2021 could allow employees to provide you with invaluable input while ensuring frivolous spending is kept to a minimum throughout the year.
• Adjusting: With the outlook for 2021 being uncertain, now more than ever you should review your IT budget monthly, to see where you overspent and underspent and to continually adapt your budget accordingly.
• Strategizing: Ensure your IT budget is based on real data and not guesswork or a certain, pre-determined, unrealistic (both in terms of underspend and overspend) portion of your total expenditure. As mentioned, to compile your budget, use previous data from your own business and consult analyst reports and industry research on IT trends and advancements.

If you’d like more detailed guidance on devising your IT strategy and tailoring it to next year’s challenges, download our helpful (free!) e-book, Your Practical Guide to IT Strategy for 2021. You can also contact us to find out more about our IT services and solutions.