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Establishing an IT Budget for a Small Business?
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?"
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. ~
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
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.
is what you should shoot for if you listen to idiots like Mr. Mott. HP is in for a world of hurt. They already cut 14500 jobs. If you are making money and employees are happy and you spend 50% of your gross on IT who gives a crap?
Wow... this is a whole can of worms. You're not going to get an appropriate answer on semi-anonymous web forum. I operate my own technology consulting firm who specializes (coincidently enough) in professional service firms such as yours. I earn my living, in part, by answering these types of questions.
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.
Entrepreneur : (noun), French for "unemployed"
I bet now you're glad you took all those Accounting classes during your studies in IT/Architecture! :)
If you don't know what AltaVista is (was), get off my lawn.
Or is that too small a business?
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
Make a spreadsheet of all expected/likely purchases for the next year. Give rough min and max ranges for quantity and price for each line item. Include things like new systems, servers, upgrades, replacements, software licensing, network hardware, the unexpected, etc. Try to keep IT wages and contract work seperate from hardware/licensing costs. Then use the spreadsheet totals to figure out a good range of expected costs for the year.
> I have seen examples of 'per employee' methods and 'percentage of revenue'
> methods, but the dollars and percentages vary widely
What do they want? Ideally, you ask them what applications and services they want, the expected availability and lifetime of those apps and services, and then give them a conservative rough order of magnitude in dollars/quid/whatever + time (if appropriate). They will come back saying "thanks" or "too expensive, try again." Ask them what services they can get rid of or reduce in expected quality, and try again. Rinse, lather, repeat.
Hardly exhaustive, but that link should get you started.
Whatever you do, don't forget to budget for ample supplies of chicken blood and other black magic staples. You know you will need it when the boss asks for those apps and hardware that magically do things that aren't possible in the natural realm.
Personally, I think a "per employee" method makes more sense than a "percentage of revenue" method. Ask yourself what technology each user needs in order to do their jobs. If you put everyone on old, crappy hardware, it'll cost you in terms of productivity, maintenance and replacement. OTOH, giving everyone flat-panel monitors will probably cost you more in hardware than you will gain in productivity. Find the balance.
Also, be sure you're considering the total cost of ownership when you turn in your budget. Workstation support, maintenance, repair, network installation and maintenance, connectivity costs, consumables (toner & ink, etc.).
domain combinatorics
This isn't an answer but once you have some numbers to work with it may be helpful to know that Gartner group studies show average IT outlay to be around $2000 per employee per year.
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?)
At my company (14 employees-ish) the budgest for IT is just "Find out what we need, buy it, and give us the reciepts". Seriously. Our IT guy just does what he has to, and justifies it when asked about it. If he can't justify it, he either gets limits on what he can spend next month, or it gets returned for something cheaper. With small companies with extremely variable budgets (months our company actually get PAID result in much higher IT purchases), it's best to take it one month at a time, and document reasons for EVERYTHING!
I like to place meaningful quotes in my sig, so people will know that I know what meaningful quotes are.
Item one: ask your employer how much they are willing to spend. Global figure and of any specific time scale (Months/years?) ON PAPER.
Item two: make a inventory analysis of what your firm has already available.
Item three: Make a careful estimates of what CURRENTLY is lacking from item 2
Item Three: Make sure you have enough man power to back it all up. Both for implementation and later day to day support.
Item four: Once its all done get a beer. Or a light white wine but in a big glass. Make sure the boss pays for it too.
Fornextone
My normal budget report method is one of the following:
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.
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?
See what I've been reading.
so what exactly is it that you... do?
Seriously, surely there are better resources (IT trade and industry mags, etc), than here? Its not like this is uncharted territory!
Here's to finally giving Bush his exit strategy in November
There's no way you can set an arbitrary percentage of turnover or employee numbers and expect to get anything more than an arbitrary conclusion.
... for your typical small professional services company if it is NOT an I.T. services company. You mentioned an architectural firm, so I'd estimate a bit high since you'll be having some unusual printer and scanner costs involved, such as huge mega-format inkjet plotters and big-ass flatbed scanners that will break a lot. You'll also have some steep software maintenance and upgrade costs since commercial drawing packages that engineering and architecture firms use are rather pricey these days. Your desktop machines will be higher-end hardware with large multiple monitors too. You might even wish to estimate as high as 3 to 3.5% of gross budget for IT-related stuff, especially if you also factor in the telecommunications stuff into I.T.
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.
If someone is passing you on the right, you are an asshole for driving in the wrong lane.
I too work for a small company that does not pull a lot of profits. The cash flow is very seasonal and the budget is kind of mystical.
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 years ago, they had a multimillion dollar budget that grew every year. The mentality was that you had to use it or lose it, so the budget always grew. Some guys (including myself) offered some F/OSS solutions that would have save many thousands of dollars. We were soundly rejected. When I worked at Discover Card, they gave incentives to those that could save money, not tell them to take a hike.
Anyway, for a small business like mine, just make a list, look back at your previous purchase orders and see what history tells you.
This space available for rent.
Ask all 20 people the following four questions:
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 hate to say it, but a lot of your spending will depend on your clients. If your clients run Autodesk CAD software, then so should you, and that will make a huge dent in your bottom line. Our clients stagnated on AutoCAD 2000 for years, then just this month decided (and these are fortune-500 retailers, mind you) "oh, lets upgrade to AutoCAD 2006, so should YOU"...
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.
You need to understand what your business does firts... what applications does it use, what sort of workflows, types of documents produced, versioning requirements, etc. and then look at the system you have and see where the holes are.
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.
Any fool can talk, but it takes a wise man to listen.
If you are going to be purchasing any proprietary lock-in software. To budget in for the enevitable operating system upgrades and office upgrades. Then of course there are the AV software subscriptions and so forth.
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?
Electronic Music Made Using Linux http://soundcloud.com/polyp
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.
You: Boss, what do you want to do next year? Boss: Blah, blah You: Ok, here's what that will cost. _OR_ You: How much do you want to spend next year? Boss: $$$$ You: Ok, here's what you can get for that much. Be sure to add 15% for contingencies; if the boss ever makes software/hardware decisions, add another 100%.
It sounds like you're getting ready to go overboard with it. In a company that size, what you really need to do is make a big list:
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, LCD monitors, etc).
6. Organize this list and make it look nice.
7. Add 10% for consulting fees.
8. Add 25% for unknown expenses.
That's it. In a company with 20 people, I doubt they're looking for in-depth breakdowns per employee, department, etc. Just make it easy to understand and make sure you have a decent margin of error for the unexpected.
FYI, I've helped on a budget for a company of 200 people and it was about as simple as the list above, but management was still satisfied with it.
You have enemies? Good. That means you've stood up for something, sometime in your life. --Winston Churchill
Those are pretty expensive for CAD programs. Also fit in OSS where it makes sense.
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 software that offers support, it is nasty stuff to support yourself.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
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.
You have a few choices as to which package that you use - most likely either SAS, S-Plus, or Excel with a monte-carlo add-in - but whichever you choose the method is the same. Assign a mean value for each input along with a probability curve that best represents the distribution of that function. The simulation will be able to compute the range of possible costs based on your model and give you sensitivities for inputs. (You can't solve probability models that have products and quotients analytically, so monte-carlo simulation is the best method.)
Do you want to:
-scale efficient networks
-revolutionize cutting-edge markets
-streamline intuitive supply-chains
-cultivate seamless initiatives
-transform extensible relationships or just make sure the network and file servers function?
First, ask the controller or CFO what the company uses for a standard method, such as internal rate of return or payback period. You don't want to walk into a presentation with numbers using method X when the management thinks in terms of method Y.
Buy all desktops as Mini-Macs if you are going to or have to use MS Office. It'll save you the trouble of Windows licensing, admin issues (OS X has a pretty sweet lock down features and remote admin as well) and can generally work without you have to bother futzing around with configurations.
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 businesses don't need 50 login licenses and an Exchange server for a handful of employees.
"I am the king of the Romans, and am superior to rules of grammar!"
-Sigismund, Holy Roman Emperor (1368-1437)
It is absolutely essential to find out what your users and their needs are first. If you talk to a few of them, you'll get an idea of what is necessary vs. fluff. But each persons needs will vary, and it's important not to lose sight of the fact that a computer is simply a tool to get a job done.
Here's a 9 point, back of an envelope plan which sums up what the big consulting firms will tell you (in less words).
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.
Mod parent up! That is probrably the best answer that is going to show up here.
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
Your accountant should give you useful information about depreciation on hardware (HW can be depreciated, SW cannot). Standard is 3 years. So, one way to figure out your baseline is to split your budget into per-employee and 'datacenter' sections. In the per-employee section, figure out what the standard config is (HW and SW), and price out a new HW config for one employee. Your annual HW budget for the employee section should be 1/3 of that figure X { #of employees } plus 15% contingency. SW would be your license renewal fees, plus any planned new purchases. Don't forget to budget for new employees; check with mgmt for planned growth rate.
Same for your data center -- plan on replacing all HW every 3 years, and your budget should be 1/3 of that. As other posters advised, your first budget is an excellent place to add in backup/redundancy HW you've been wanting.
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(Support staff salaries) + (# of PCs hardware cost) + ($699.00 per user to SCO) = your budget.
Trolling is a art,
Friend, I'll give you credit for actually asking the question. It's a smart person who admits when they don't have the info they need, and tries to find out the answer instead of winging it. But, you're going about the solution all wrong. Proper IT support is not just about numbers - there's soooo much more.
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
"Depression is merely anger without enthusiasm." - Anonymous
Percentage of revenue, cost per employee and so forth are handy metrics for comparison, but only after you've figured out what you think the budget should be.
Consider what you'll need to spend just to 'keep the lights on' This covers things like annual support contracts for any software you own, preventive maintenance for your hardware, etc. Present this to the boss(es) with a short description of each item, what it cost you last year, what you think it'll cost you next year, and an explanation for any changes year-over-year. For a company as small as yours, I'd expect this to be a single page, at most.
After you've dealt with that, get a little fancy. Consider presenting a "project portfolio". This is a buzzword for a particular approach to justifying IT expenses, wherein the IT department presents a list of potential and existing projects (the "portfolio") from which management can then choose where to invest funds. To do this, you should summarize those projects you have in mind that will either a) enable your employer to make more money or b) enable your employer to spend less money. A decent summary will consist of a nice little table of these, with estimated costs, estimated benefits (both in dollars, and any 'soft' benefits that aren't easily quantified), an estimated time to completion, risks related to undertaking the project, and risks the company will be exposed to if you don't undertake the project. Again, I would guess that in a smaller company, this would be a page or two of mostly text, in a nice table.
Those will give you a good start. Once you've got those documents ready, you'll be able to have a discussion with the boss that will address business opportunities, and how IT (that is, you) can help the company with those opportunities.
$5,000 per year per employee.
That's $2,000 for PC ($1,500 box + $500 monitor), replaced every 2 years
$1,000 in sofware licenses (replaced every 2 years)
$1,000 (50 hours over 2 years @$20/hr) for support and tech work (that's 2 hours per month, nothing really, includes setting up new PC every 2 years) (note $20/hr includes $13 for wages and $7 for taxes, etc)
Extra $5,000 every 2 years for server stuff (backup, file servers, application servers, email servers, firewall, t-1 service, printers)
Yes, that's 100,000 a year for 20 ppl. But it's really $425 per month per employee. Not that much compared to their salaries ($3,300-$6,300/mo).
Also, the first year, you'll spend $150K getting and configuring all the stuff. You won't ahve to do much the next year, but year three and thereafter you'll have to have somebody replace user pcs.
I did not include the IT manager's salary, because that does not depend on the number of people.
Also, if you think more people will reduce costs, think again. More people mean more complexity, and 50 people can print more (and use up more toner) than 20 people.
Also, don't forget to adjust up 3% annually, or in a couple of years you'll be very tight.
If your business relies on custom software from a third-party vendor, add $5000 per year per user.
If you have people with laptops, add $1000 per year each (they break/walk faster).
hope this helps.
And this does not include telco. If you're doing voip, look to double your network infra, with 100K extra up front (servers and phones @$250)
"Piter, too, is dead."
Slashdot should not allow these posts. They are embarrassing for the rest of us.
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.
All the people with management experience in architecture firms must be groaning as they read this.
When you have positive karma, maybe people will actually give a shit about your moderation opinions.
First, look at what has historically been spent, not just on equipment, but also on consulting, repairs, and an estimate of the costs of unscheduled downtime. Next, look at your client's future plans. Did they just sink a major contract and need to expand, either the number of workstations/servers or the capability? Are they planning a move?
Armed with that information, take a good hard look at your client's existing hardware and software. Is it up to the task? Probably not, or else we wouldn't be talking. Find the holes and come up with a plan to fill them. Use existing equipment to backfill these holes, as you will find the worst equipment is on the desks of the least senior people. Make sure this remains so after the upgrade, moving the senior folks' machines to the desks of the underequipped juniors, then giving the seniors the new and shiny equipment. If you do it the easy way, replacing the old with the new, you will have some bruised egos and these are the people your client listens to. Keep 'em happy.
The result of all this is your upgrade / migration plan. Repeat the process for workstations, servers, network infrastructure, software/security, and service. Put it in writing.
Items to note: In small business IT, Everthing in the walls and closets are the most neglected. Set these up for a bit of overkill and a clear upgrade path. Once they hit the closet again, they will be forgotten, unless something goes wrong. If your client will permit, add in monitoring to your equipment and service budget. You will know if something dies before your client will, and you look like a miracle worker.
End result: A happy client with equipment that suits his needs. A happy techie (you) that has a continual revenue stream.
Your firm must be big enough to have an accountant, if so, time table a long meeting with him/her/it and thrash it out with them. You might as well, it'll only end up on their desk again anyway. Come up with a range of options that meet the requirements and the account will help you put figures on things, including your assessment of the liabilities in el cheapo solutions. Personally, I've had a good success level and good experiences with turning the "gatekeepers" into collaborators that way.
Plays violent online games as: Nerfherder76
if you're new to the company, get the previous 3 years IT expenses, including outside services, software, hardware, etc. From that, you should be able to determine the baseline for your budget. Now, figure out what you want to do to IMPROVE the department over the next 5 years, and make sure you've discussed this with other department heads since they WILL be involved.
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, include some training $$ for GNU/Linux. Just being able to support one or two OSS projects will save the training costs and then some.
LoB
"Anyone who stands out in the middle of a road looks like roadkill to me." --Linus
Honestly, when you build a house, you don't go down to Home Depot and start pricing 2x4's and door knobs - you look at existing metrics (price per square foot for homes built in the past year in your specific region) as a pretty good barometer of what it is going to cost. It doesn't really matter in the big picture that Home Depot is having a sale on bathtubs - that doesn't change the overall cost of the house.
... the works. Want just the IT (computer) budget, try closer to 5%~6%.
Metrics vary by industry, and by how agressively a company is going to grow (and use tech to grow.)
A back of the envelope calculation, not knowing your industry (oil-field company very different than a consulting company, for example, but strangely enough their IT budget as a percentage of gross revenues will be pretty close - but banks and insurance companies will spend a lot more) would be roughly 7% of your gross revenues for all things technical. This includes copiers, fax machines, the phone infrastructure, pagers and cell phones, network, email, laptops, desktops, servers
I'm not saying it can't be done on less, and for a really small company with a tight budget (civil engineers are about the WORST when it comes to prying money from their cold, dead hands) and open mindedness (eBay, Craigslist, less than 100% uptime or reliability, not having legitimate licenses for all your software, not having all the toys the users want, etc.) you can get away for as low at ~3%, maybe even 2.5% (I have done it, and yes, I did all of the above) but only for so long. Cut too many corners up front and you are simply feeding a sleeping dragon that is going to wake up hungry in a few years = system maintenance, in particular number of systems each tech can support. The day you need to hire a second IT tech to support your infrastructure is the day the real cost of buying cheap crap comes back to bite you - save $100 per machine to hand build each one over the course of 3 years only to have to hire a $50k / year additional person to help you keep them all working = bad.
I just bought a used Dell 2001fp for $250 for the home, got a great deal and I am happy with it - but that is no way to run a business. This doesn't really add to the discussion, but I really, really like my new monitor.
Glonoinha the MebiByte Slayer
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.
Small potatoes make the steak look bigger.
As an IT Director for a small non-profit, I've always focused my budget around specific projects. Not just projects the IT department is calling for, but other departments as well. Part of the trick here is forecasting what how your users are going to push your infrastructure, or what projects may call for new software or outside consultation. This may call for breaking down some silos in your company. Also build in some emergency money in case a last minute situation arises. Build a theoretical project and determine it's budget. Also, any money that you get this year for your budget, make sure you have at least that much for your budget next year... or you'll never get it back in the future.
Is the company planning significant growth for the budgeted period (year, quarter, whatever)? That would be a major factor in determining a budget.
As someone who's never done a budget (other than budgeting time) I feel safe in suggesting that whatever figure you finally come up with, tack on 10-20% extra.
rooooar
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FIGURE OUT WHAT YOU SPEND MONEY FOR
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ESTABLISH ESTIMATION METHODS
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CALCULATE ESTIMATES FOR EACH CATEGORY
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COMMUNICATE
Finally, especially if people in your firm aren't used to a formal budget process (which is sometimes the case in small firms), be careful of two fundamental (and very stupid!) budget fallacies: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 to pay for. (Some of this will depend on how your firm accounts for things: for example, does the IT budget need to include imputed costs for office space. Talk to your financial guy.)
For each category of expense, figure out a sensible way to estimate the cost. Some categories (e.g., salary + benefits for current employees, maintenance contracts) will be easy. Others (e.g., new development projects) will be more problematic.
Apply the methods you identified in step 2, and include an appropriate risk contingency -- more uncertain, difficult to forecast items get a higher contingency amount.
The most important step. The budget should not just be thrown out as pearls before swine -- it's vital that you document, and that people understand, the estimation basis (as in Step 2) for the budget estimates. (This will defuse a lot of arguments. It may also uncover some land mines: "Gee, how much of this is for the new office we're planning" -- and forgot to tell you about.)
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Putting money into the budget does not (or, at least, should not) guarantee that it will be spent.
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Taking money out of the budget emphatically does not guarantee that it will not be spent.
(You may think I'm belaboring the obvious, but I assure you I have seen these two crop up many times.)For my home "consulting business", I get to spend as much on "IT" as my wife gets to spend on clothing.
It seems to guarantee that my budget gets approved without much trouble.
I worked as an admin for a small telecom company with around 50 employees. The owners of the company were very concerned about how much $ IT needed. Any spending had to be explained in detail and documented, etc;
What I quickly realized was that buying new hardware such as pc's (with Linux preloaded to save $), small non-managed switches, UPS', even lower end servers, tape drives, etc, were the cheapest of all.
The big budget killers were when I had to renegotiate contracts with our AV vendor and other such licensing fees.
If you can, run as much on OSS as possible. This will save your small company money.
We play the game with the bravery of being out of range
The parent's point is well taken.
It boils down to this: don't forget to factor your wages into the budget. Is your time better spent working on the computers or drafting.
My own experience is quite old but the general principles still hold. In 1990 I got some money to equip the technology department at the high school where I was teaching. As part of my research I paid a visit on a previous cow-irker.
He was employed as an electronics technologist in an organization with about a thousand people. His time was completely consumed with looking after peoples desktop computers. He got the boss to pitch all the PCs and replace them with Apples. All the time he was spending on support vanished instantly!
The trouble was that I could get twice as many computers and twice as much software if I went with PC clones. So, I ignored my buddy's exeprience and got PCs. The result was that I never got home in time for supper for several years.
Don't lowball the budget expecting that you will substitute your labor in exchange for getting things cheap. Get the tools you need to reduce the amount of time you spend supporting computers. Factor your wages into the equation and I bet you will come out ahead. You will also look a lot better if you aren't always having to fix broken stuff.
Next, look at use of IT in the same commercial sector as yours, are there any aspects you might want to adopt? extend? do something 'similar' but 'better' i.e. innovate upon? If so, write down the work necessary.
Finally, agree with stakeholders what you want your IT systems to achieve. Don't be vague, be specific - you need to work out 'what' you want at this stage but not 'how' you want it done.
Armed with this information, you should have a clear direction for your IT department. You should have a list of requirements and desirables.
Email your requirements to some IT consultancies that can implement your needs. Most reputable companies will talk to you and give you ballpark figures without you having to buy their services.
The goal here is to get the biggest return for your investment in IT. Sometimes the cost of doing nothing will be far less than the cost of upgrading or replacing a system, in which case you hold off on modifications in that area.
Other times, the cost of doing nothing will be more expensive the cost of implementing a change, in these instances recommend these changes.
Finally, you should hand to your boss something that tells them the amount they ought to spend and what benefits you expect.
PS: Don't forget, some benefits don't have direct financial benefits but may make customers more likely to use/recommend you, staff happier to work for you, etc.. Mention these benefits.
PPS: If your company culture is technophobic then bear in mind the cost of change can be high (retraining, errors using the new systems, etc).
Good luck :-)
Hi-
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
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)
People who think they know everything really piss off those of us that actually do.
I work for a "SME" as they like to call it with about 50 employees. Our IT budget is calculated per-head and per-project plus internal infrastructure. This is kept artificially high and we stock pile equipment when we can get it as our budget will go down if we get "just what we need" so we can't buy new workstations 2 years down the line. Budgeting is about lying as much as possible to keep your company on the rails.
responses by IT insiders who really have no understanding of the business picture.
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 "strategic" into manipulating them into any more than they need. If they want the least expensive solution then your job is to find and make the least expesive solution work.
If they think throwing gobs of money at the systems will guarantee zero problems, then make sure and keep their expectations in check.
I like to point out that 4 hours of downtime costs X amount of employee time in $.
We use an outside consultant who we have basically full confidence in, and we simply just follow his suggestions.
If your clients run Autodesk CAD software, then so should you, and that will make a huge dent in your bottom line. Our clients stagnated on AutoCAD 2000 for years, then just this month decided (and these are fortune-500 retailers, mind you) "oh, lets upgrade to AutoCAD 2006, so should YOU"...
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 upgrade pricing. Acad2002 goes EOL in January of next year, so expect another cycle of your customers upgrading by then.
What part of "shall not be infringed" is so hard to understand?
The trouble with a small group is that the standard deviation is too large.
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't forget sales tax, and put at least another 20% in to cover situations where you won't be able to use the cheapest vendor for some reason ("needed the toner NOW") etc...
We're a similarly sized shop and I've faced similar challenges.
I think it's unrealistic to think in terms of departmental budgets when your entire operation is fewer people than a fast food franchise.
What is more productive is to plan a set of roadmaps of where you think you'll be in a few years. One for growth, one for survival, flexibility... whatever the likely possibilities will be. Then price out the bits that would enable each path.
After you have that part done, compare them to see where things are common and where things are different. At this point I wouldn't use these assets to plan a single budget and submit a number to the ceo or whatever. I would present the different roadmaps as strategic scenarios with lump-sum costs. Then I would outline the cost of what you definitely need (the common assets) and present a range of additional costs depending on which path you end up taking. State when these additional funds would be needed and how far ahead of time you would know you needed to spend it.
This may be a bit more useful than just presenting and defending a single budget because small businesses can't afford to switch gears on a whim. You need to plan ahead and make purchases and investments shrewdly, with future needs, cost and scale in mind. And giving finance a ballpark of what future costs could be at different stages of the company will help the company decide when to make certain moves or prioritize certain goals over others.
Generally, I think small shops are volatile enough that long term planning and flexibility is needed and annual budgets are kind of counterproductive and risky. It's more prudent to work as a team, figure out where you want to be 3 years from now and make infrastructure development part of the plan to getting there.
When you get to a point where a $50,000 mistake is small enough to stomach, then annual budgets make sense. Not now.
The problem with a small buisiness is that the needs are constantly changing, especially in a small business that is growing. Expect a turnover on computers of about 3-4 years depending on how conservative the company is. Then you need to try and predict growth and realize how much money in software and hardware goes into each new user. You also need to determine how much money in software upgrades are required, depeding on the company (ie. an autocad using company) you need to spend a large sum of money every couple of years for every current user. There are really too many variables to get a solid idea but those are some that I would suggest....Remember in a small business improved equipment, new servers, printers, VOIP will be adders that you won't know you need until you do.
About a year ago, my company's IT department rolled out LCD screens to every employee and I was ecstatic. Not so much because I had been clamoring for a new screen (I hadn't even thought about it), but because it was an upgrade that actually made some kind of logical sense.
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.
Breakfast served all day!
Damn it, doesn't anyone on /. know that the IT function is only in business to support the business goals. Find out what can be set into your IT budget by first finding out what actually supports the business. Then present your proposal based on what the business will gain by using the technology.
Most for profit organisations will want anything that (a) reduces costs, (b) improves efficiency and (c) goes faster.
You might need to replace any applications and hardware that are no longer suppported, purchase some IT products that are needed to meet regulatory requirements and so on.
You could also start by looking into Information Systems rather than IT. I can recommend a book that won't impact too much on the budget (less than $50) its called "Strategic Planning for Information Systems", my version is by Ward and Griffiths, published by Wiley.
There are a lot of informative Information Systems books that will point you in the right direction, many dedicated to the requirements of different sectors.
For the love of mike, don't go running to the finance guy for his advice, since when do finance guys no diddly about IT?
We're about a 200 person company, and we go off of a percentage of revenue as our budget. It works just fine. You're smaller, so it might not work as well, but you need some kind of comparison to the money the company is making. You can go in and say "This is what we need, this is our budget", but this can easily cause overspending in your area.
It's very easy to spend a lot of money in IT and think "Well, we need it" and actually be way overspending. Whatever you do, you need to have some kind of limiting factor or second non-IT head looking at everything.
I've seen far too many people in IT who spend on the latest and greatest thinking, "This is what we need", when they could really get by with less. And they just went and wasted a fortune.
Create a 2 year plan and a 5 year plan where you think the company should be in 2 and 5 years. Then stick to the 2 year plan. That will create a baseline for budget. That simple. Don't try to put in the world. Try to do 1-2 projects per quarter. You must stick to your 2 year plan or you will always try to play catch up as well as dumping money down the drain. Five year plan can be more flexible and items in year 3, 4 and 5 should be able to change without breaking the bank.
Don't have people SCOPE creep your budget. That will kill you. Have short term projects set in stone, long term try to be flexible. Put some padding into those long term items.
After about a year, it will be a good measuring stick. Do not spend per employee. That model is hard to work with and often times gets you pigeoned holed into apps, OS's, etc and then a year from now, you have to rip it out because it no longer works or is out of capacity.
Work with Virtual servers, centralized storage, and good disaster recovery items when you can. This save you money in the long run. If you can swing it, you might look at leasing hardware as well but just watch out when your lease expires - you will have to migrate the app or data off to a newer machine. Leasing does help with spreading the cost over a longer term without paying too much up front.
Hope it helps.
I am not sure what level of answer you want here, but it seems from this 'percentage of revenue' business that you could use some advice at the highest level. (My apologies if I came to the wrong conclusions based on the short snippet that was on the slashdot front page.)
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 justification is that the new budget will make a lot of money for the owner.
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.
"Academicians are more likely to share each other's toothbrush than each other's nomenclature."
Cohen
I work for the IT dept of a ~2000 employee company. One thing we've found useful this year that allows us to make changes to budgets due to unforseen projects that pop up for various reasons, is the introduction of "rolling budgets". This means instead of having a fixed budget of what will get done each quarter for the entire year, each quarter all the projects that were scheduled for that quarter get final review and approval by the exec team. Sometimes new projects are introduced, others delayed and others brought up higher on the prioratization list. This allows for max flexibility as well as realism of what is needed when while allowing for the ability to turn a large ship faster to keep up with competitors (or stay ahead of them).
Our IT budget formula is almost scary simple. The business side of the company first comes up with what their priorities are for the year (i.e. open new offices, sell certain products that require new IT infrastructure, etc) and based on that, the IT budget is formulated. Stuff like, training, security audits, contingency plans for network and server equipment that could otherwise die unexpectedly, licensing issues etc are all taken into consideration at the time of budget for a particular product and are added in there by IT management. Then the business side just gets a very high level view - as in here's what it will cost from the IT side for your project. Then taking that number + other expense, they do a final calculation as to whether or not that is profitable project to initiate.
Of course there's a lot more detail than just this, but there's some useful basics to start with.
best of luck
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 knowing that I can usually argue successfully for "better" because no one likes to spend money on disposable solutions.
Best is, well best. Industry best-practice, best-of-breed hardware and software. Usually pie-in-the-sky type stuff. Enterprise level spending goes here. I rarely get it (once in two years) but when I do I feel really good.
When setting department budgets I try to get a feel from our senior management of what IT issues will be business driven in the coming month, quarter, year, etc. and then prepare my budgets for approval using the outline above. 70% of the time I get "better" 29.5% of the time I get "good" and 0.5% of the time I get "best".
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 infrastructure in the same way that one or two QA guys will. The QA guys may not need all the tools of the development staff, but they'll need hardware that roughly approximates what your customers are going to be using for load/functional testing. The devs might need one or two workstations each, but the QA guys might need five or six, each with it's own licensing and maintenance cost features. Likewise, a developer may not be terribly taxing to your communications infrastructure, but when QA is replicating a customer problem that requires loading the network elements to the hilt, you'll need to consider the costs of creating subnets (and adding NEs) that can isolate that traffic from regular network goings on. The time it takes to set up and maintain these new subnets is part of the cost. I think, from what I recall of of managerial accounting, that this is called activity-based costing. Someone will likely correct me if I'm wrong.
Consider also the idea of pitching more than one choice for what needs to be added or where money can be spent. Yes, you're the expert in all things IT, but people like choices. If you can propose cheap, middle, and spendy alternatives to dealing with a given purchase problem (if not to present to someone else, than for your own use), and qualify each with pros and cons, it may help you decide where the money can best be spent. Which alternative is going to satisfy in the 6 month time horizon? Which will satisfy in the 12-18 month horizon? Having a menu of choices that can fit into various anticipated need scenarios for capacity will help you when new challenges come up.
One gotcha that is always lurking as you plan a budget is the "voice of optimism". It's natural to expect that the business will grow over time, but you can't plan on that. You can only budget for what you need, and -=need=- is based on immediate concerns. Budgeting (and then spending) based on growth expectations is a dicey thing. You can easily get into places where you overshoot the need and end up with excess processing/network capacity that never gets filled. Those ten rusting Netra pizza boxes you bought because you were so sure that customer X would be depending on you to have them will be the stone around your neck when you get thrown overboard. Solution: buy one Netra pizza box for baselines and partner with the customer to gauge expectations about how many more you'll need and when.
Oh, one of my own pet peeves was not having enough disk space available, or the drives available to increase partitions when emergencies cropped up. Budget for plenty of spare HDs and make sure that SAN capacity upgrades (if you don't have a SAN, then a file server) are planned with all necessary funds allocated. Once I get past 60-70% capacity, I start worrying and looking for new drives. Make sure the people that affect your budget understand that storage is a big fluffy cushiony pillow that costs money to stay so comfortable. It's never an emergency cost, but you'll need more storage space each year than you needed the year before. Disk space is NOT a flat yearly cost, but you prolly know that already.
hope it helps
.. pa-ra-bo-la, pa-ra-bo-la, 2 pi R, 2 pi R, where's your latus rectum, where's your latus rectum, 2 pi R
As a member of IT department in 100 employee small business that is primarily computer-oriented, take my word: "Whatever you allocate will not be enough! Unless you do like twice the budget you amply need."
Either it's better laptops for developers or those QA servers ($3000 each) or replacing outdated/dying hardware. You'll be running out of money in no time.
Well, in any rate; you have to look at the company really needs and also consider what you plan to accomplish within the budget time:
If you need to hire a new person, that's 30-40K+
If you need new computers, plan for 1k each or so, laptops for about 1.5k each. (Give or take $500 on quality).
If you need new servers, plan for 2K+/each easily, more if you need better than low-end stuff.
Give yourself at least few thousands/month in terms of leeway, as you never know what kind of weird things you'll suddenly have a neeed of.
If the company is growing fast, ask for more than if its growing slow. (You'll most likely to get the numbers you need if you ask for more initially, but don't be greedy).
Remember, IT is a growing field, and if the company doesn't want to expand their IT base, you need to get out of there no matter how much you like the company itself.
I could go on for a while, but this should give you enough of a start.
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 numbers I can stick too 99% of the time. None of this, "Oops, Office XYZ came out this year and we need 24.5K to upgrade Office JBF to XYZ. Suck." Another advantage in the CAD busienss is you do not have to rush out and buy that one copy of CAD.Latest when everyone else (except that 1 customer) is still good with CAD.LastYearsVersion and then shuffle all that customer's files to the ONE user who has CAD.Latest.
-- Treat hardware as commodity. In most cases it does not merit your time to do anything under the hood apart from a memory upgrade.
-- My trick: write your budget out in a spreadsheet. You will have lots of line items. Spend an hour organizing them (software, VARs, hardware, printing services, server hardware, battery backup, off site storage, whatever). Now put this list away for a solid week and then revisit it.
-- TALK TO OTHERS IN YOUR INDUSTRY ABOUT THEIR SPENDING.
Best of luck,
-- RLJ
Hello, Tirthas. Interesting question, thank you for asking Slashdot! I should say I am not really qualified to answer your question because I have not ever managed an IT budget personally. However, products like AutoCAD LT 2006 are licenced on a per-seat basis http://www.novatech.co.uk/novatech/specpage.html?A UT-118961 I believe. If there are 20 members of staff I expect your employer plans to expand. A per-seat calculation could help the business owner decide whether to take on another member of staff by giving an idea of what expense to allow for an extra seat.
I would not use percentage of revenue because questions of revenue are not yours to ask IMHO. Revenue may go up and down but staff count may be relatively stable I expect. If avoiding percentage of revenue saves you having to do recalcuations, it will have the golden virtue of being the simpler method.
The first post is the best answer to that questions, the rest of the posts are from morons.
To the wisdom offered by others, I would add these insights:
1. Approach your budget from a project perspective. This means that instead of giving your boss a Christmas list, you present a group of project proposals. Each proposal identifies who, what and how much.
2. Prioritize these projects, getting your boss' input. Budgeting/funding decisions are then made on whole projects. With a list of prioities already in place, what to cut is then an easy thing to do.
3. Include plans on re-using old parts, or how you plan to dispose of these things. Smaller businesses all too often either throw away perfectly good technology, or keep junk in the basement (or both). For example, RAM from an old machine can make for a free upgrade for a box waiting to be upgraded.
4. By staggering the implementation of new technology, old units kept at the company for re-use become your "loaner fleet"-- machines you can rapidly swap with similar machines that go down. This lowers the cost for your employer and makes you look like a star.
5. Don't forget the $20 killers-- keyboards, mice, UPS batteries, etc. Standardize these things and find the vendor with the best price. A bad UPS can cost hundreds of dollars of lost labor alone if it fails at a crucial point. Don't forget to UPS the comapny's network, too. (I have never found a smaller company with UPS protection for their network. It's a little hard to emergency save to the file server if the network is dark.)
The other thing to keep in mind is that you need "thoughtful" input on what you are buying. Its one things to decide if laptops or desktops would be more cost effective IT wise, its another to ask people if they prefer a laptop or desktop but the real question is, what does it mean for your culture and work style.
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.
Why would a 20 person firm need an IT manager? What do you do all day? I think the first step would be to fire yourself and hire a good third party IT shop to manage the shop...
Just design an Apple based system. Then you can skip all the anti-virus worries, you've got most of your functionality built in, and when the hardware costs are amartized you'll save a boat load of cash.
is often one of the easiest. The bean-counters, especially the computer-illiterate ones, look at the WidgetMaster 2000 and all they see is a price tag, because they have no idea what this magic device does, or how it is going to help the company make money. When all you have is a price tag to work with, all you can do is go cheap. ;)
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.
I work for the Department of Redundancy Department.
If this is your first year budget (ie. something that management just thought might work) then chances are you are going to have been in a holding pattern for the last several years (just fixing things).
;-)
So take this opportunity to do a bit more of forward planning. I am sure you have some idea of what is required to get the system to a reasonable level right now. However be aware this figure is likely to scare the hell out of management. So take the next step and work out what you will need the following year as well. Chances are you will see a smaller amount that management can appreciate. It also gives the accountants some figures to play with (well we can't afford the new switch this year, but we can put it off to next year).
But as some of the posters have said here, go and talk to the accountant or other management figure that holds the purse strings! It is in this negotiation that you will see certain constraints that you will need to work within, as well as provide them with your view of the current situation and your priorities. If you can negotiate effectively then you will see your budget develop before your eyes with preapproval.
But before this, just prepare what you need!
So again, look up to three years. Factor in licenses, consumables and other things that you will purchasing yearly. Call this the recurrent budget. This isn't going to change majorly from year to year (with the exception below).
Then look at the capital items. These are the big purchases that need to happen and are bought infrequently (servers, plotters etc). Work these on a yearly basis, just give the account time to find the money (ie. Let him/her know well before the next budgeting cycle).
Once you have your capital items, use this to change the recurrent budget. If you buy another server, you will need to increase the recurrent licensing line. If you buy another plotter, increase your consumables.
And above all, try to factor in NEW staff. As soon as a new staff member arrives, this will more than likely necessitate a new computer, licencing and consumables. Try and factor a cost for this and let the accountant know. He/she already has costs (recruiting, pay, superannuation etc) associated with another staff member. Another associated cost makes both your life easier. Of course replacements don't count!
And the last bit is, don't feel guilty! Your first budget will not go far towards fixing all of the problems and risks you currently experience. So if the line item for new server gets axed and 6 months later the server dies, don't feel guilty. You did your best! Sticking the final budget to your office door may be the best way to avoid angry users!
Oh, IANAA. Just learnt from my mistakes.
Your entire system will need to be replaced over and over again as the stuff gets old. Budget = value of system divided by life cycle plus IT staff salaries.
Yes, Mod the parent. I run my own business similar to the author of the reply If you think it is too expensive, consider the cost of it not working or not fulfilling your needs. Seek out several professionals and get bids. Don't go with a consultant who is locked into one solution. Don't listen to salesmen.
The most important task you can perform is to define your business needs. A good consultant will start from there. Don't buy hardware first! I see this all of the time. The cost of doing this wrong will be much greater than hiring a professional to do it right.
âoeIn theory, theory and practice are the same. In practice, they are not." â Albert Einstein
Get a IT service provider to supply all your IT requirements, then they can use the money saved from your salary to buy a couple of new pc's
In my part of the world (northern Italy) the only parameter that works is the ROI* index. A 1,000$ computer in admin will improve productivity by 10% for 3 years. The business' turnover is 100,000$ g.p.a. thus the investment is good (bloody good!). A 500$ wireless kit will improve productivity by .1% ... no way!
If you have no idea how the new investment will alter the productivity ratio, then it doesn't even get considered by those who run the budget.
That's how we work, hope it's of some interest!
Alex.
Because you haven't defined what type of industry you work in or stated what the company's long and short term goals are there are many questions that need to be answered. For instance...
How good are you "in" with those that make the hiring and firing decisions? Is your growth in personnel stabilized as a company? Is your small business computer-centric? Where is it growth wise you plan to be in 6 months? A year? 5 years? What is the level of computer savvy-ness of your users? Is your business affected by seasonal trends? What exactly are the business needs of your employees? Do you need techinical or specialized software/hardware? Do you have additional fulltime IT staff? At what stage are you growing the IT infrastructure? Everyone has a computer? X amount of people have to share a computer? Your staff hasn't used computers but have seen them used? What are the hours of your business? 9 to 5 weekdays? Works weekends? 365/7/24? Are there laptops? Do your users require portability? Do your workers work at home? Is there lots of travel? Do you work in a major metropolitan area? Do you have to support PDA's? Do you have standardized software? Do you have a standardized OS? Do you support "company" machines or do you support "personal" laptops someone brought from home to use at work? How much freedom do workers have to install their own software/apps? Do all your workers work at the same time? Would digital convergence help your users or is it too many things for them, for you? Is your company seeking to be bought out or merged?
These are a handful of questions that need to be answered.
It just doesn't make sense. For starters, you will save $50-$80k per year by firing your IT guy (depends quite a bit on where you're at). Second, you will have at your disposal a whole staff of experts in every area from security to database design to wan/connectivity. These aren't overwhelmed guys with their A+/MCSE/whatever struggling to make sure everyone's PC boots up in the morning, these are experts who each earn much more than your company will ever pay for an IT guy, yet because you only pay for the time you acutally need them, they cost very little. Of course you'll have break/fix guys as needed as well.
End result, you will have the benefits of a full IT department but will pay much less you would for one guy who just wings it most of the time. I don't care how great you are at this or that, no one person is an expert in all the areas that even a very small business can use IT expertise in.
Now on to the equipment side of your budget... well who better to make recommendations than someone who's job it is to analyze the market and help your company (and hundreds of others much liek yours) pick out the best solution in terms of performance and ROI. Not someone who does research on the web in between help desk calls, a real consultant who has relationships with vendors, attends trade shows and has been doing this for years. Again, outsourcing makes sense and saves you money.
I know I am biased, I'm a consultant :) But I think my points are pretty strong. Outsourcing is something every small and even some medium businesses should really consider.
-Lod
I work in a school where the workload is likely less and most of our systems are identical, but we usually go two Microsoft cycles before upgrading and junk the old stuff. Our spending is way less than 1% of budget.
What I would do with 3% is spend like mad on the hottest hardware for a thin client server (using Linux) each year so our CPU power/memory/storage capability would increase linearly, replace mice, keyboards, screens (with a shift to LCD), fans, power supplies and thin clients as needed. Having only a small cluster of servers running identical stuff would really cut the maintenance load and allow spending on stuff people touch like mice/keyboards and printers. If you keep those things looking good, keep the system getting faster instead of slower, keep files safe and do not let it crash with failover protections you will be a hero. With that kind of cash I could have backups for my backups and hardware that would just keep going.
Last year, I was in a school that spent $50000+labour going from Lose98/NT to XP/2003. Using a Linux terminal server and replacing the ten year old boxes (the six year olds were solid) would have cost $5000+labour, a lot less labour. Updating XP on all our desktops took two days with all kinds of problems. Updating the Linux terminal server can usually be done in an hour or so apart from download time. At 3% of cash flow, I would have had $150000 to play with... I might not have had room to hold the goodies.
A problem is an opportunity http://mrpogson.com
As we all know, the biggest dent in budgets is made by personnel costs.
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.
It's starting to seem like the more I learn, the less chance I have at getting hired anywhere.
I'll do it for 5 million:
;-)
- 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..
in your org (who read slashdot most likely) know to sabotage the boxes they want to use. Then un-sabotage them once they get them. ;p
Rather than giving them just a budget, set some baseline technology objectives for the firm and use them to guide spending. Things like, "No front-line PCs over 2 years old." "No piece of equipment costing more than 30% of replacement cost to keep running." "No LAN speed less than 100Mb/s in the infrastructure." "No piece of enterprise software more than 1 major revision behind current."
These things will be guidelines that will let you count hte cost to get to the standard, and give guidelines on future spending as well.
- Sig this!
Been there, done that.
Just make a list (on a spreadsheet) of what you might need for the coming budgetary period..
Divide it up into relevant sections such as Hardware, software, support, etc..make sure you have relevant documentation as to why you need all this stuff. Come up with a proposal to the "powers of be"....
KISS principle (keep it simple, stupid)
Clive DaSilva Email: clive.dasilva@gmail.com Ubuntu 18.10 Kernel 4.18
You really need a business case. There's lots of resources out there to help, but the basic idea is to compare the costs of having IT with the costs of NOT having IT. It's pretty easy to work out the former using TCO calculators and the like. Working out the cost of NOT having IT is the hard part, but ultimately it's what will convince your boss. You have to look at opportunity costs and costs-to-revenue too. For example, the sticker-price for an anti-virus package might be $100. The TCO for three years might be $500. (Straightforward.) The cost of NOT having that anti-virus package would be the cost of losing data, losing time, losing clients, losing revenue etc multiplied by the probability of those events happenining. (Difficult.) There is one saving grace: you don't really need to work out the cost of NOT having the anti-virus package in any great detail, just whether it's (significantly) above or below $500. So, in this case, you don't need to fuss about whether it's actually $725 or $730 (or whatever) - if it's over the threshold then you demonstrably need it!
First of all, you have to support your current IT infrastucture. Hard-drives will fail, tapes wear out, classes/books for learning stuff, etc. etc. This budget is the easiest to make, look at historical spending.
Second of all, will the company grow, stay the same or shrink (yikes!). Talk with the managers - what do they see. This is your projection for new workstations, switches, increased tape backup, more hard drive space, etc. etc.
Thirdly you go sit somewhere and *think* about what IT can do to help the company. Growth, increased efficiency, competitive advantages, alignment with a big customer's needs, etc. etc. Basically it's what you can do with technology you don't use, or under use, or mis-use. This project (or projects) will have costs and benefits. Sell the project on it's return, or on the benefit for being able to do something your competitors can't do.
Then add 10 to 15%. That's what your boss will take out. Unless he's a saint.
*click**beep**beep* Scotty, One to Mod up!
Go with the valid method(s) that offers the largest "justifiable" budget possible.
*drumroll*
.513% of the individual's gross salary, per year, unless they're a receptionist, in which case it's half that; or if they're a partner, it's three times that. Take the result, multiply by 2 if they're born on a Saturday, but divide by 3 if they drive a white car.
There, that give you enough to get the things you need? No? Then how about you identify the things you need, and buy those?
Really, it comes down to this: your bosses hired you to give IT recommendations. If they need to compare your recommended costs against some arbitrary metric to see if you're highballing or lowballing, they're trusting the metric more than they're trusting you. There's just to many factors to make that reasonable--the only case that you could use this in is in 5 years, when you plot future budgets against past budgets. By then you should have some correlation between success of a project and IT layouts, and it's tailored to your very specific environment. But until then, buy what you need, have a rainy day fund, and don't spend a dime more.
--
$tar -xvf
Is your firm a cost center or a profit center?
Slashdot = Sarcasm
Here's a tip that often gets lost on people: Everything in business spending -- and by that I mean EVERYTHING IN BUSINESS SPENDING -- comes down to one thing: Return On Investment. How much do you get back for what you spend, and how fast?
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 Computer.
It's amazing how many people don't get this. User: "I want this, and this, and this." Me: "Will it help you do your job?" User: "No." Me: "Buh-bye now." Salesdroids, too: "Our new Plasmomatic 6000 SUX can make copies and solve the halting problem!" Me: "But I just want to make copies. Why should I pay for more?"
More serious examples: When evaluating new network printers, I look up how much paper we bought for the thing over the past couple years and figured out average pages per month. Cost-per-page is easy to find in spec sheets these days. I picked a few models, got the costs and calculated differences in same, and then figured out how long the savings would take to pay for the price differences. This pointed right at the model to buy.
I found the QA people were doing diagrams for their procedures in, $DEITY help me, Microsoft Paint. Getting approval for a vector graphics program was simple once I showed how much faster it would make things.
Conversely, when the new CAD guy wants a high-performance laptop but will only be on the road three times a year, it's easy to point out that the ROI is not there. He gets a much cheaper high-performance desktop, and he can limp along with one of the "floater" laptops if he has to.
If an investment can't pay for itself, you don't buy it.
A lot of budget decisions become a lot easier once you understand this concept.
dragonhawk@iname.microsoft.com
I do not like Microsoft. Remove them from my email address.
Comment removed based on user account deletion
You must have a long-term strategy for document preservation. You must also make sure that you can still retrieve and view these documents up to the end of the life of the practice's liability for a particular project: that means keeping hardware, operating systems and applications software available so that the contract documents can be reviewed at any time until the liability is over.
This is not an option. The long term survival of the business can depend on this.
Save your company some money; if you have Windows desktops connected to the internet, don't even bother to put locks on the doors as you've already guaranteed access by outsiders. Doug Hettinger www.SoftwareObjectz.com
http://www.softwareobjectz.com
Make sure in your listing that you express the importance of the upgrades and staffing.
Here is what I mean, if you main drafting guy has a problem with his computer so he loses a half a day, calculate the cost to the company for his down time verses possible additional staffing.
Also, same key employee on a 2 year old machine verse current technology. I know personally when I am do alot I can get my machine to the spot were it is dragging so I lose time waiting. Take that amount of time and figure out how much productivity the employee is losing.
Depending on your responsibilities and the size of your office the second IT person may not be cost effective but the newer computer may easily be justifiable.
i think the real question being posed to our friend is: for our small architectural firm, how many copies of autocad photoshop illustrator are we buying this year? what is the minimum software and hardware we need to purchase to keep our employees productive whitout breaking the bank? i was speaking with a guy from a small architectural firm last year during a focus group, and what i gleened from that conversation is how much architecture relies on presentation. marker renderings and topographical models have been replaced by 3d renderings and photoshop compositions from existing elevation photos...
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.
three can keep a secret, if two are dead - benjamin franklin
IT's budget should be taken out of the budgets of other departments. For instance..
I've noticed sales teams suck up more of IT's time than any other department. Aside from not being totally computer savvy and requiring constant training, i've seen laptops that got mangled/dropped on the way back from trade shows, an insistance on getting every new gadget that comes out (palm pilot/GSM cellphone/marital aid)
I think this would be a much more fair way of distributing IT across a company. Engineering folks almost never call IT. Same goes for the phone support folks, but sales, marketing, accounting, and everyone on the executive level with a ditzy assistant sucks up more of IT's time than world of warcraft (which has been sucking my time away like mad as of late)
Something else i've never seen in IT is accountability for service calls. I've seen vantive databases, keeping track of what calls go where, but i've never once seen IT manager A. go to sales manager B. to tell them their underling is sucking up 5 hours a week for the same problem.
I guess i'm just jaded. For some reason taking the cost of an IT service call out of an employees paycheck seems like the best to me.
Well, he probably doesn't need to drop $20,000 on a consultant to tell him his list is a little thin, and he should be spending more. Sorry, but I think he has already received many valuable answers. Generally, I suspect managers hire you because they think their IT guy doesn't know what hes doing. If my IT guy suggested a high priced consultant, I would assume he didn't know what he was doing, and either get him in-house budgeting help (if he was really good at the geek stuff) or find someone better.
If you read his question, he's not trying to come up with a budget - he already has one. Reading between the lines, he's worried that its too much. Cost per employee or percentage of gross revenue is a yardstick against which the budget will be measured by non-techincal types, and compared with "industry averages" to see if spending is in line with competitors. If he's really concerned that his budgets are high, he needs to grab the president/CEO and have a one-on-one before budgets get presented.
By the way, running IT as a profit center tends to piss off your clients. I happen to run a small engineering firm (architecture-related), and have worked in both government and commerce in several firms, and have a wife who has been business operations manager in two industries. People HATE being nickel and dimed for little shit. In a field like architecture, where there are as many small firms in a city as there are ants in your back yard, you have to make people love you to get clients. Annoying a single client with a bunch of little line item charges can mean the loss of a dozen or more potential clients/jobs. BTW - in most (medium) architectural firms, everybody is a cost center, even the architects. Fees tend to be negotiated based on a percentage of estimated construction, not hourly rates or printing charges, and are usually fixed - or nearly so.
Is it just my observation, or are there way too many stupid people in the world?
This worked for me last year:
"If we don't spend the money on migrating to SQL Server from Access to run our business, by the end of the year there won't be a business to run."
Simple. Truthful. Effective.
I have managed small technical centers for over 10 years. One thing is constant. You will never budget correctly. but the following helps.
Force yourself to be part of the planning of the company - not just the 'technical' budget. Most comapnies do not know what is available to them and what options they really have to leverage technology for their business needs. Once that planning is done, simply budget the costs of the business plan.
For maintenance, take the average price of a new PC/laptop times the number of employees and divide by three. Adjust up or down for your circumstance. Add $120 per employee for a non-open source environment. For your datacenter, assuming no known purchases, plan on the replacement cost of the datacenter and divide by 5. Add license costs and annual maintenance. That should get you as close as the best budgeters out there.
Zero - the bottom line - what do I need to keep the lights on around here? Figure out what you need to replace in the next 12 months, like toner or ink and which computers are past their warranty (either budget to replace the computer or buy extended warranties). If you have just enough for step zero you have no extra dollars. You have to include this in your budget.
One - risks and easy wins - Is your backup strategy good enough? Do you need an off-site vault? Is the IT stuff covered by your insurance? - budget at level 1 to cover likely risks and disaster recovery. Also, would it be cheaper in the long run to use color laser printers or ink jets? What about LCD monitors? Should we upgrade the file server? Level 1 can catch easy enhancements that will make IT run better or cheaper, but require investment up front. Typically you'll hold this money for most of the budget period then spend at the end if the risks have not materialized. You should include this as "discretionary" budget.
Two - Project time! - Do we need to switch operating systems? Do we need a SAN? What about that new document management solution everyone's talking about? - here budget for projects that would be cool or profitable to do but need serious attention and high-level approval before you can get the money. Don't spend too much time unless you have a really strong this-will-make/save-money business case, but try to think of at least one so the boss can cut it (or not!). This is the discretionary high-risk, high-return territory. Good projects tend to find money - the executives will go get the additional money if you show them how it will come back to the company, and if it's not needed elsewhere for the core business - so projects don't always have to connect to the budget cycle. They'll change the budget if it's sweet enough, or instruct you to include it next cycle.
Present all this in these three sections, with projects and enhancements in their own paragraphs/sections so they can be individually crossed off the budget proposal. The point of the game is not how much you can get, but to get your have-to funding and some of the rest in a way that shows your boss you understand the difference between "can" and "have to", and that what you spend on "can" has to make an improvement that's worth the expense.
Yup. It's true.
I'm currently working in IT for a 100 employee firm, and I can guarantee you how often the office machines just goes "oh god, that damn thing just died."
Death have been mostly attributed to hard drives, but other hardware failed unexpectedly. There was one machine's capacitors were leaking and causing Funky Problems(TM), and an IBM ThinkPad R32 with a battery that crashes Windows, while without the battery, the machine crashes a lot less - which then I found that one of the pieces of RAM was bad and removed it.
Yeah budget enough so that you can replace things when "oh god, that damn thing just died". Thank god we haven't have one for our servers... oh wait, I hope I didn't just jinxed it.
I spent a little time volunteering in a computer recycling charity.
... but I've never been good at listening to authority figures. It took me a couple of hours to get this down - granted I didn't have the bit of paper, but it suprised me that all the qualified technicians at the (big) firms we got the stuff from couldn't /wouldn't do that.
We got lots of CRTs that worked fine but were a little dim or a little off focus.
Guess what? It takes about two minutes to open the case and another couple to adjusted the screws for focus and brightness.
Sadly I was told "under no circumstances do this for yourself" (high voltage kills, kids!)
Hey-ho.
What you're asking is some very rudimentary stuff. The fact that you're asking such basic questions suggests that you are taking on a task for which you aren't prepared. I suggest you get a consulting firm to help you.
Having said that, there's a whole bunch of things you need to look at; incremental rate of return, establishing your minimum acceptable rate of return, managing risk, the time value of your money, the payback period, your financial ratios, etc. etc. etc.
There are experts who specialize in just this kind of thing. The worse thing anyone could do for you is lead you to believe that a few posts on slashdot have left you prepared to sink your good money into a project when you don't know how to manage it.
Yeah, that's exactly why they did it. But EOL doesn't always mean the end of use. Just look at Windows NT... If it works, and its paid for, and it still runs on current hardware, and the new stuff out there doesn't offer serious productivity gains, and you're operating in a closed security environment, then why upgrade? That's how they see it, and to a certain degree I can't argue with that.
I just used AutoCAD as an example, but there are a lot of other software packages that clients use that don't get upgraded 'just because'. Project 2000 is one of them. When the upgrades happen, though, they happen fast. Unfortunately for us the clients, being large corporations, usually have massive software licensing discounts available to them that we do not, so they move fast and far (like the Acad2000 to 2006 jump). Luckily we beat them to it by a few months.
Those accountants can never get to many figures.
I disagree with that reply. Because I've helped put together some business startups that began with LESS people than that, and helped guide them in the *right* directions for building out their businesses. Each of these firms hired me for exactly that skillset which they lacked in their other people, and they were fortunate enough to realize beforehand that the cost of OUTSOURCING their computer expertise needs to a joe schmoe IT shop that doesn't give a rat's rear end about their business's long term survival is far higher.
I've seen many small firms slowly burn up on the vine when they fail to have someone on their staff watching out for the companies interests when the joe schmoe IT shops comes back regularly upselling their latest 'promotion of the month' to them. Besides, anyone who tries running a small business without such a person on staff is also running the risk of making many very costly IT mistakes, because not all IT shops have the required expertise for every computer project. (Would you feel safe betting your business's first SQL database server on a IT shop that has never attempted an SQL server install before?) This particularly applies to the outlying rural areas, where really good techs come few and far between.
[Now, I'm off to lift my le... Um, visit... at another place.]
Thank you to everyone who replied--your answers (the serious ones) were extremely valuable. And I definitely got a laugh out of the others.
I don't remember much about my accounting classes but that sounds like a typical case of depreciation (I most likely am wrong, can somebody correct me :-) ).
The software is 6 years old, somewhere it should have been budgeted money for a possible update. It is not like it would have come out of the blue.
If you don't have to upgrade then you are under budget! (and depending on the situation you may be able to spend that money elsewhere, but the point is that this kind of "intempestive" upgrades can be expected using educated guesses).
IANAL but write like a drunk one.
This is how I made trough, as you see, the software side is about free (qCAD does cost some money in commercial form, and I guess that version will work better too (I'm not sure)).
The acer laptop won't suffice your needs if you wish to render with blender, you will have to wait some time with all the reflections etc. Therefore I suggest a minor render farm, 3 amd64 3800+ machines in it will give you a very good productivity (those render pcs don't need a good GPU in it, since that isn't really used. RAM: 256Mb ram will even suffice, 1024Mb if you tend to put extreme detail in your houses). Please note that this render farm is not really expensive, you don't need the screens etc for it. But if you'd really want, you could use them to design on too...
I advise you to give the architects a bad laptop, with a good screen on it. You really don't need a fancy machine for it, the amd64 is extremely good if you compile qCAD for it, it really does give a decent performance gain.
Then again, at the end, you will still have to design the houses, 'cause that's what it is all about.