Although North American IT budgets are expected to slightly increase in 2016, companies in most other regions expect their IT budgets to stay the same or be slightly lower. This could cause problems for several companies due to the current migration to Windows 10.
Many companies rely on technology to gain a competitive edge. This often requires additional initiatives that add to the budget. Since budgets are not expected to increase much, if any, IT departments will need to prioritize initiatives and put the low priority items on the back burner.
Exactly how Microsoft’s Windows 10 operating system release will affect companies depends on which version they currently have deployed. Companies that have Windows 8 deployed can choose to keep that as Mainstream support will continue until 2018. Mainstream support for Windows 7 is already passed. Companies that have a heavy reliance on this version will have a big decision to make. If they want any support other than regular security updates, they will need to pay extra for that.
Most software migrations cost more than simply updating or replacing the software. There is the cost of training IT staff to implement the migration. Further, most IT departments don’t just haphazardly start upgrading an operating system. They set up test environments and assign or hire staff that can perform the tests. It’s only after running through these tests that an IT department can certify that it can be rolled out company wide. These test environments are not easily assembled as very few companies have the necessary hardware and software lying around. This will require additional purchases which will affect budget projections.
When budgets get cut, hiring freezes are often mandated. This can happen at a department level or more typically, across the entire company. This makes it difficult, if not impossible, to hire more staff. This makes IT initiatives a bigger challenge to complete.
One solution that companies could use is to hire consultants. This is not without its problems but consultants do not add to the head count and there are no extraordinary costs such as benefits and pensions. Consultants are fully aware that after the job is complete they will be let go, although extensions are possible. Companies have a much easier time justifying consulting expenses, especially during hiring freezes.
Although many IT budgets have decreased or stayed the same, one area that companies are increasing budgets for is cloud services and managed software services. This is because these types of services can be fitted to the needs of a company and adjusted easily based on usage. The infrastructure is already in place so changes will not take weeks or months to implement. Often they can occur immediately when requested. This trend is likely to continue well into the future.
Many companies use technology to compete by creating innovative solutions that competitors lack. Without increases to an IT budget, innovation could take a hit and make these companies less competitive. This may result in losing customers and sales. If companies want to continue to stay competitive they will have to determine which initiatives will lead them to that end.
Another great way to save costs is for companies to consider using refurbished technology. For some companies, doing this may be against their policies and will not allow it. Companies that have no such policies may look into this option. The cost savings using this option can be significant and could even mean the difference of completing all the IT initiatives that have been budgeted.
Companies will have some great challenges in trying to align their budgets with aggressive IT initiatives. It’s going to be interesting to see how this all plays out and who will come out ahead. IT budgeting is a tricky process and requires knowing which initiatives need to be funded, what kinds of equipment need to be purchased, how much staff is required and how long the initiatives are going to take. Estimates based on these factors seldom come in line with actual costs and time frames.