IT budget management

The issue for IT teams is that most budget items are not in fact there for use by the IT team. There's arguments to say "hey I have a heaps of infrastructure that's there to serve everyone else, not the IT team itself". In the end, most IT costs aren't actually "IT", it's a cost of doing business. How you break this down is something that the company needs to decide on, but overall you can't necessarily be the owner of all the costs and be ultimately responsible for them.

From a budget perspective, splitting things down at an "IT" level is probably most useful to identify apps, costs, software, hardware and how it relates to different departments. An app might be a marketing thing, but having the VMWare environment to run the VM to host it is more of a shared cost.

Budgeting is always as much around reporting as anything else. Cost breakdowns should tell you something useful, eg what is our marketing cost per sale, or manufacturing cost per item made. So in that sense, even if your app/software costs for marketing fall under IT, having them separated and included as a marketing cost where possible, helps to give everyone a proper idea of what your cost per sale is.

While you can say that everything except salaries, desks and laptops, is not directly an IT cost, where you draw the line is tricky. If you can budget and get useful metrics then however you actually what I would say matters.

If you contribute to identifying better cost metrics through your budgeting, your finance team and CFO will probably not care about the actual overall numbers, and you will probably be pretty popular and get an invite to their secret Christmas party.

My personal recommendation would be that at MOST, you charge them back to the departments based on use but they stay a part of your budget. I say this because, in a depressing amount of personal experience, if it's part of their budget, they'll inevitably decide either A) they don't like how it works and decide that it's their right to go find and purchase a new service/vendor/whatever (while never actually getting rid of the old one, as often as not) that you're now responsible for supporting or B) they'll decide they don't like it/don't get enough value from it, ditch it, then decide it had some functionality they NEED and have to bring it back (neatly dropping it right back in your budget).

IMO, under most circumstances, the capacity to trim your budget isn't worth the trouble it then causes. IT stuff, even if it's rarely touched by non-end-users, is IT stuff, and that includes the rights (the ability to say 'no, that's out of policy' or 'no, that's not supported') and the responsibility (footing the bill for it).

welcome to the club my friend. IT is the blackhole that everything gets charged to in most organizations. Software, hardware, etc /etc. Hell, we used to foot the CEOs plane from the IT budget (haven't a clue on that one). Usually what ends up happening is that they will be one large chargeback to each department at the end of year, most places I've seen do this by IT budget / total people and then charge each dept based on the number of folks they have. It's not even close to what it should be in most cases.

Don't rock the boat at of the gate. Figure out how everything works the way it does and why. Then, as you get more tenured in your role you can start to ask questions and push for change after you do your research.

If needed you can look at it one of two ways.

1. these are IT expenses and you should develop a baseline for you IT cost as a percent of sales and that’s your metric.
2. if you need to you can split the cost and internally bill it back to departments based on users or use. Mail chimp probably more marketing.
   Frequently it is easier to leverage IT relationships or vendors To get a better price or to vet things out.

IT is a catch all a lot, if it’s in the magic box it’s IT.

I worked at a place that entirely ditched any IT budget - IT had to cross-charge everything they did to other departments.

I was only a 2nd line at the time, but it was an absolute shitshow. Arguments about how long I'd spent on certain tickets so they knew where to charge my time to. Awful.

And it all started with making certain departments pay for their stuff.

Most software purchases are logged in our IT budget, but I indicate department (Cost Center) if it's specific to one department over another. Same with hardware purchases. That way I can display the data if the discussion or need dictates it. Some day I might setup department employee counts to include in a formula to split up company wide software costs/other costs (like O365).

What application(s) do you use to manage/track your budget?

Much of what you want to do is done by your accounting dept. If you want to get an idea of how to move forward it is worth having the conversation with your CFO or someone in accounting who is high up enough to know and give you solid answers (not your PR or AP clerk).

You can have a budget that shows dept/division’s cost as a percentage of application, service, system, etc (based on an appropriate metric ie users, seats, licenses, whatever) and the hard dollar amount. This is ideal IMO but will require substantial work. Find out what the expectations are for your budget and then decide what is reasonable and discuss. Every year in your budget improve something- the first year establish those metrics for how cost can be divvy’d. Also start keeping a ws with all of the expenses you saw come thru (you do see these invoices at some point right?) that were not included in your budget. The second year, check your budget numbers against a eoy GL ytd report for the account codes that pertain to your expenses (or do those account codes pertain to other items as well? If so that’s year 3 and will require heavy cooperation from accounting). So keep all previous years budgets and/or iterations. Anyway that’s what I have to offer.

The way I view this is the job of IT is to research, advise, deploy, configure, administer, etc. technology solutions to run the business and make it more efficient. That software isn’t for the IT department but for this business. The model you presented is extremely common and what I’m used to.

When you can find cost savings through negotiation, app rationalization, downsizing, or whatever, that’s additional dollars you could potentially use for actual IT stuff. I can tell you one thing, the business doesn’t necessarily care whether you get that shiny new tool to make your life easier unless you can unequivocally show that it will help the bottom line.

I jointly manage our IT budget and that’s a major part of our job… ensuring that our tech stack is efficient and multi-use vs just letting each business department buy software in which we already have a solution for because “I like this one better”.

Is there a purpose to moving the expenses? Like, will it make the communications department think more carefully about how many email campaigns they launch? If not, I'd say keep those expenses in your dept that way you own them. If you want to make a change, like to a vendor with better pricing or better support, you have a seat at the table.

This isn't really your call. It's leaderships call. My IT budget includes operations applications such as the payroll system. Just part of what we are generally responsible for tracking.

I work for a software asset management company, Snow Software. (shameless plug, but Snow is the best for visibility of 700,000 software titles and license entitlement across the entire company's end user devices, servers, mobile devices, cloud). The major use case for our technology is to track software usage and costs that you can charge to respective departments. So, instead of trying to guess what department should broadly be charged, you can see the exact users and their department, aggregate the cost and charge back.

For a product like Microsoft Teams, Zoom, etc those are likely used by several departments and those BUs can all have some cost allocated, versus other tools like Mail Chimp and HubSpot might be charged to marketing only, and then tools like Salesforce might be charged to sales and marketing only.