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What to Do When Your Budget Is Too Small

Brien Posey, Freelance Writer and Former CIO | 12/4/2012 | 57 comments

Brien Posey
One issue that almost every IT manager will face sooner or later is that of an inadequate IT budget. So how can you work within the limitations of an IT budget that is way too small?

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.

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J-Lo   What to Do When Your Budget Is Too Small   8/7/2013 6:34:22 PM
Re: Budget woes

I am new on my Macbook and the tradition wasn't that hard as I was expecting it to be. For normal routine work its really easy and simple. I am using MS word for mac and it does not give me headache. Yes for excel I had to google to find out the keys and ways to go about. But that is how I learnt on my window computer as well. These days I am trying my hands on Final Cut Pro (the video editing software). It is the best tool used by pro and youtube has made life really easy for newbes like me. All you need is buy it and google for what ever you want to learn. 

TJGUK   What to Do When Your Budget Is Too Small   8/2/2013 9:42:44 AM
Re: Budget woes
Oh yes that is absolutely the case. It is also why their products are rock solid. I love the iPad and would consider getting a Mac if the Win8 GUI continues. The Win applications will work on a Mac and I don't have to constantly worry about viruses.
J-Lo   What to Do When Your Budget Is Too Small   7/17/2013 6:10:11 PM
Re: Budget woes

May be its because Apple is one window shop for customer, where as MS is a third party software provider. Even the window mobiles are not produced my MS itself. MS is like a accessories supplier to a car manufacturer who enjoys the monopoly of its products.

TJGUK   What to Do When Your Budget Is Too Small   7/1/2013 9:44:11 AM
Re: Budget woes
And because they produced such quality items, they built up a loyal fan base that will pay the premium prices for Apple products. MS on the otherhand does not create any good buzz or have a rabid following like Apple does.
J-Lo   What to Do When Your Budget Is Too Small   6/9/2013 12:05:01 AM
Re: Budget woes
Oh yes, I agree Apple has that sex appeal in every product that they have come up. The quality, design, look appeal, feel makes a lot of difference. they not only focused inside the device but also crafted a piece of art ourside as well
TJGUK   What to Do When Your Budget Is Too Small   6/7/2013 8:18:10 PM
Re: Budget woes
Spot-on J-Lo. Jobs was one of those rare folks who knew what people wanted and how to make technology accessable to all. Plus I think he had an artistic flair as the Apple devices are so nicely designed. They exude quality.
J-Lo   What to Do When Your Budget Is Too Small   5/14/2013 5:51:10 PM
Re: Budget woes

TJGUK, Steve passion and commitment with the company was seen over the years. He was not only ahead of time, but he also understood what people want or what they would want. He created the need by his innovative ideas. Apple may have all the expertise in house to develop any product but they lack the skill to understand "what people want"

TJGUK   What to Do When Your Budget Is Too Small   5/2/2013 1:56:06 PM
Re: Budget woes
Absolutely right on. Apple thinks about the user experience and people respond to that. While I have not (yet) gotten a Mac, I do have an iPad and had an iPod Touch. Both were well made, high quality devices that made life easy and fun-right out of the box. It is still a treat to use them unlike a Windows device which is good until you need to install something.
TJGUK   What to Do When Your Budget Is Too Small   5/2/2013 6:44:10 AM
Re: Budget woes
The problem with Apple is that it was so tied to Jobs in every aspect that anything else that is done without his blessing is suspect. Without innovation, tech companies will fail. And they will fail quicker than traditional companies. Add to that the fact that Apple has a cult like following and you have a real problem keeping that behemoth going. It is more than just being a music artist running their course. This was at one time the most valuable company in the world by capitalization. Like all great companies, they will have to find ways of keeping themselves relevant over the course of time.
J-Lo   What to Do When Your Budget Is Too Small   4/13/2013 7:31:59 AM
Re: Budget woes

Zaius, nothing is immortal may it be fame, success, innovative idea etc. Agreed. But this does not mean "not to try". One vision gives birth to another idea. One idea paves way to newer invention all that is required in a company is to paddle the cycle of vision, idea and invention.

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