We are continuing our series that gives back to the industry answering the question, “What does a fractional CIO do?” and each article will outline a specific service offering of Outsourced CIO LLC in the day and the life of a fractional CIO. Some call this “virtual” Chief Information Officer or “fractional” CIO (we prefer fractional as the “vCIO” term has become a buzzword and misleading – see our FAQ on this). Because the fractional CIO creates value for growing businesses who might not otherwise be able to afford a Chief Information Officer, our topic for today is “Managed Complete IT Budget”
This is a quarterly project or service, estimated time 5 hours.
Deliverable: This invaluable service facilitates the annual budget creation process, and updates the quarterly IT budget. It can also provide a thermometer through a bi-annual service utilization report and managing the owners of the expenses while rectifying the under-management of SaaS subscriptions, classic licenses, maintenance contracts, telecommunication, ISPs, mobile subscriptions and having checks-n-balances on annual renewals planned in a calendar.
Description: What is the current problem: The average SME is totally wired with IT services, from telecommunication to software licenses. An abundance of services, software, applications, and devices are available to make companies more competitive. There are myriad ways IT can greatly enhance our company, so we add new services and IT related expenses all the time, and creating regulations around them is not easy. This means expenses are ramping up everywhere.
Failure to manage IT-related budget items centrally can cause serious overspending. Choosing inappropriate plans, not following up on price changes of services, and changes to user count can cause unnecessary expenditures. Using multiple tools like productivity applications and collaboration tools in the company can easily result in overlapping functions.
What benefit does this provide: The Managed IT Budget service solves this problem. The goal is to make sure that the CEO retains the ultimate control over IT-related costs. Gather all the cost drivers (services, SaaS subscriptions, licenses, telecommunication, etc.), put it into one spreadsheet, and make decisions. Choose responsible people for each item and enforce a reconciliation practice, then in every quarter make small governance on the budget. This service ensures a review of the usage and utilization of the many applications and of annual plans to make sure renewals are not automatic. Engaging in an IT budget Strategy will result in:
- Predictable Budget planning
- Stabilized Purchasing
- Financial Alignment
- Greater visibility into technology spend
- Completed Budget spreadsheet
- Actual spend tracked on a monthly basis
One of the major reasons that IT shops do not have budgets is because of a gap in knowledge. Engineers are not trained as accountants and vice versa. An easy to use budget template bridges the gap by allowing a breakdown of IT costs to allow for more engaging conversations such as why managed infrastructure helps stabilize budgets! It is recommended to follow up on the Annual budget planning with Monthly recordings of actual spend. Then as part of your Quarterly sessions review projects to align them with the actual spend and events occurring in the business. One item you will want to be sure to discuss with your client is any options for managed assets you may have available. Generally, CFOs try to avoid spikes in spending. This is where managed services shine. If you see a lot of random PC purchases planned throughout the year…you know what to do.
- Complete Managed IT Budget To-Do List Template
- Build an IT Budget that Demonstrates Value Delivery
- IT Budget Spreadsheet Template
- *Email us if you would like a copy of these templates.
That is it! That is what a fractional CIO does. Have a tech-stress free day from Outsourced CIO LLC, where we demystify technology for growing businesses.
*Extra resource reinforcing the topic area is below. Disclaimer, resources/links are not necessarily endorsing the products, goods, and services of the author and should not be construed as an Official OCIO endorsement of said resource/vendor.