Real SMB IT:How To Start Your First Zero Based IT Budget

April 8, 2010

Like many businesses in the small to medium enterprise, I have started looking at our expected technology costs for our next fiscal year. So I chose to take this opportunity to write out for you a few posts describing how I personally look at IT budgeting for SMB organizations.

If you are like many typical SME’s and ask your IT team for a quick update on your previous fiscal years IT costs, usually you will find that the only costs that get identified  is limited to relatively simple costs such as;

“Well we bought 2 servers, 3 PC’s and 5 notebook computers, and oh yes, that contractor did some stuff on the web site.”

Probably Not!

The one thing that I can guarantee you is that those costs are usually just the tip of the proverbial iceberg.

First, in a humorous vein, if your business already has perfect charts of accounts breaking down your IT CAPEX and OPEX costs, thanks for dropping by!:-)

This post is for the rest of us trying to catch up with you!

So then! If you are a general manager, let your finance team have a heads up that IT will be asking a few questions, and then ask your IT Team Lead or Manager to get this started.

Starting With Zero

To start off with zero, the first thing we have to do is determine as much as possible exactly what we spent last year. So first thing; set up a meeting with your financial  staff, In this meeting, there are two things that initially you want to look at. First, Ask that every new invoice of any kind that could be related to your IT function be flagged for your review. The second task is to look at every technology related invoice for the previous fiscal year. (tip: This good time to look at formalizing the purchase process too!)

As you go through your previous fiscal years invoices, document the cost, date and origin of each and every item purchased. I know you won’t find everything because some things may be hidden in general office supplies.  (USB keys or blank DVD’s may be fairly cheap individually, but you may be buying them by the box as people think they are disposable)

The key point here is that you are not just looking for those servers or workstations. Documenting those capital expenses is the easier part, we want to dig deeper into the operational as well as the capital costs. Examples of costs that you will be looking for include;

– Your Internet connection, there will be recurring costs for that service

– Your Web Site, and domain name, there will be recurring fees for those

– Software, look for new software purchased, but also annual subscriptions for products such as anti-virus software or hosted applications

– You found invoices for ‘spare parts’? Those mice or keyboards from the local PC box store? Great, you want those too.

– Add in all consulting & repair as well as all professional services

At this point you will have have started to build a breakdown your previous fiscal years actual IT operating expenses. There are still a few more areas that you will want to grab costs, those will come in a future post!

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One Response to “Real SMB IT:How To Start Your First Zero Based IT Budget”


  1. […] the first post, I started off with many of the details you need to collect that will allow you to determine what […]


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