What to Do When Your Budget Is Too Small

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When IT managers are first presented with a budget that is way too low, their first reaction might be to protest (sometimes loudly) or to beg or attempt to justify the need for additional funding. Although these ploys have been known to work on occasion, they can sometimes do more harm than good.

The organization allocates a carefully thought-out budget to each department, and the department heads are expected to make their budgets work. Those managers who express an inability to work within their assigned budgets might be viewed as non-resourceful, wasteful, or even whiny. As such, it is usually better to make the budget work if at all possible. Of course, this is easier said than done.

The first thing that I recommend doing when presented with a woefully inadequate IT budget is to review the previous years' or quarters' expenditures. One reason for doing so is to determine how much of a budget shortfall you are going to have to deal with. More importantly however, you should be on the lookout for wasteful or relatively unimportant spending that you might be able to eliminate.

Once you have gotten a firm handle on where the money has been spent in the past, the next step is to look toward the future. In all of the organizations that I have worked in, the head of the IT department was responsible for building a roadmap of future projects. The problem is that these projects always come at a cost. That being the case, there might be some projects that you can defer to a later date as a way of saving money. For example, most organizations probably do not have a compelling business reason that requires them to upgrade user desktops to Windows 8 right away. Therefore, if a Windows 8 upgrade is on the IT roadmap for this year then you might be able to stretch your IT budget a bit further by waiting until the next budget cycle to do the upgrade.

Another thing that you might be able to do to save costs is to combine certain projects. For example, suppose that one of your projects for the year is to virtualize any servers that have not yet been virtualized, while another stated goal is to upgrade all of your servers to Windows Server 2012. You might be able to reduce costs by doing both projects simultaneously. Windows Server 2012 Datacenter Edition is licensed to run Hyper-V and an unlimited number of virtual machines running Windows Server 2012. As such, it will usually be cheaper to purchase a single Windows Server 2012 Datacenter Edition license for each virtualization host than to purchase Standard Edition licenses for each server that you want to upgrade.

You might also be able to trim some fat off of your IT budget by getting a volume discount. In these tough economic times vendors are anxious to earn your business and will often bend over backwards to accommodate you. To put it another way, it’s a buyer’s market.

Several years ago I was faced with a situation in which the IT budget that I had been given was not enough to cover everything that I wanted to do for the year. I ended up negotiating with a local VAR to get what I needed at a substantially reduced rate. The basic idea behind the agreement was that for the next year I would purchase my hardware, software, and maintenance contracts from the vendor in exchange for a price that would allow me to meet my IT goals for the year.

While negotiating with vendors can be a very effective technique for bringing down costs, it isn’t the only type of negotiation that might help you. Sometimes you might find that you just can’t trim enough spending to make the budget work. In those types of situations, you might be able to negotiate with management to get additional funding.

As you may recall, at the beginning of this article I said that asking for more money is usually a bad idea. While I stand behind that, there is a big difference between asking management to give the IT department money and asking management to invest in an idea.

In most organizations the IT department exists for one reason. It is there to help the organization to accomplish its business goals. Although the IT department often has goals that have been mandated by management, IT directors can usually also set some goals of their own.

So what does this have to do with negotiating with management? The trick is to show them how your pet projects will save the company money and then ask for something in return. You might say for example, that you have come up with a way to save the company X number of dollars, and that if the project is successful then you believe that you can save the company even more money. All you need is for management to fund the project.

Ultimately, there is no single trick to coping with a budget shortfall. Even so, creativity can often help IT managers to make the most of even the most miniscule IT budgets.