Technology Funding – Rules of Thumb

Technology impacts every aspect of your organization. From human resources to accounting, technology is critical for business success. Budgeting for technology can be difficult because it is so far reaching within an organization.

To help alleviate technology funding and budgeting, below are a few general rules to help you navigate the maze.

Technology Must Haves

Your technology budget must include certain items based on your organizational structure. Don't let the gadget allure trap you. A few must have budget items include:

• New computers for new employees
  
  
• Replacement computers for existing staff
  
  
• Software upgrades – if you're two or more versions behind, you need to upgrade
  
  
• Printers, scanners, and fax machines
  
  
• Aging file server replacements
  
  
• Network equipment such as routers, modems, and firewalls
  
  
• Technology training
  
  
• Accounting system upgrades
  
  
• Website upgrades, maintenance
  
  
• Technical support
  
  
• Connectivity support (email, website, internet connectivity)
  
  
• Technology planning support

These are routine "must budget for" items. One typical item organizations fail to plan for is staff training. You get the latest computers, software, and support but employees aren't productive because they don't know how to use the equipment.

Technology Cost Estimating

There's no one-size method to determine technology costs. Successfully pricing your equipment needs will depend in large part on your ability to research multiple vendors. You can hire a consultant but you'll likely pay $125 per hour or more for someone to put together a good estimate.

One rule of thumb for technology estimating is called the "two percent rule". Routine expenses oftentimes average approximately 2% to 5% of an organization's total budget. This will give you a rough starting point but shouldn't be your final answer.

You may also want to consider funding for special projects. A Website overhaul, database conversion, or new phone system installation are special projects. Special projects are out of the ordinary costs which may or may not include ongoing operational costs.

Because technology is mandatory to do any work at all, you need to plan for its expense. Treating technology as a standard part of your budget guarantees that you will be able to operate well into the future.

 

Written by: Frank J Klein - CIO

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