Mid-Year Evaluation of IT Spending in 2016

With computer and system resources constantly changing, spending on Information Technology, especially for profitable businesses, must keep up with the times. IT budgets should always reflect those changes, but many companies, are still showing fewer launches for new products.  Thus, small, medium and large sized businesses may want to give their IT budgets a checkup — right now is a good time for that!

This Survey Says…

Spending on Information Technology is a definite concern, according to results of a survey from IT solutions provider TEKsystems.  The survey questioned more than 300 IT leaders and professionals (CIOs, directors, hiring managers, implementers, etc.) about budgets, resources, expectations and the realities of upgrading equipment to meet today’s ever-changing technological needs. TEKsystem’s “Reality Check” survey (June, 2016) looks at current market conditions and how spending needs, skill requirements and company budgeting play a part in the process.  According to the results of this survey, many organizations are concerned about their ability to keep up with technological demands for launching products with newly developed hardware and software.  However, for others, actual costs were lower than expectations.   

For example, when asked a question concerning actual 2016 IT budget allowances (compared to the fiscal year’s original forecast), participants say expenditures are about 11% higher than expected. But organizations whose budgeted IT elements did not change from the previous year have reported that they are actually equal to — or have decreased from — those targeted at the end of 2015. When asked how confident they are in the ability of their organization’s Information Technology department to handle the job in today’s market, the answers vary from “more confident,” “about the same,” and “less confident.”

But why does it matter?

The Business of IT

Spending on IT tends to overshadow other companies’ priorities, says Channel Insider, a provider of Value-Added Reseller (VAR) and Channel Partners industry news and information. Hardware, software and Information Technology solution providers MUST be able to bring new products and operating system capabilities to the table. When companies feel they can spend the money, they will want proof that a pricey IT solution will add to the value of their business.   IT professionals and solution providers must know — and prove — their worth.  

Information Technology includes more than setting up a website for company sales and service.  It is …

• Business intelligence (BI)
• Big data
• Cloud computing
• Security
• Mobility

Networking is still a part of this plan, says TEKsystems, but, as 2016 moves on, cloud computing is rapidly on the rise; data center solutions are becoming more (or just as) important. Cloud adoption, or Internet of Things (IoT) projects are bringing the need for more specialized IT skills.  Data analytics must be applied to business solutions.   

Mid-Year Business Review

Now that 2016 is more than halfway through, it is beneficial for businesses to evaluate their successes and further needs for the fiscal year. Mid-year reviews are worth doing, says the Toft Group, an executive search firm.  Determining the “health” of a business at the halfway point helps to see what could be year-end results.   When reviewing a business, executives might want to look at:

• IT Budget Reality: Has the company’s Information Technology budget significantly increased each year to keep up with expected changes? Reviewing all spending versus revenue is crucial to businesses, all year long, of course. But creating large, perhaps even overinflated, budgets for IT is recommended for businesses that want to stay competitive.  Buying new desktop or laptop computers, for example, is only a small portion of the expense for creating a well-operating database and system.      
• Products and Services:  Ask customers directly about whether they feel they’re getting the best bang for their buck.  Is the website working as needed? Customer surveys and face-to-face contact are productive and useful.  Even in today’s online world, consumers still enjoy, and in many cases prefer, actual customer service from real people!
• Analysis:  Following the industry path is imperative. Company goals must change to “keep up with the Joneses” because competitors are out there!  Monitoring a company’s goals for consistency within the organization (and more importantly, outside its parameters) will help its competitive edge.  What are similar businesses doing with their Information Technology resources?     

IT Spending Evaluation on Qualified Personnel

An important factor to IT spending is the ability to fill those needed positions, says TEKsystems.  They include jobs in database administration, security, hardware and structural architects, datacenter operators, and web content creators.  Personnel with very specific qualifications are needed to fill these kinds of jobs; salaries can be very costly, especially to a small business. Outsourcing these services is an option but in any case, the ability to implement new technology (or utilize refurbished and revitalized equipment) depends on the amount of money a business is willing to spend in order to keep itself current with advancing system requirements.  This figure should be constantly scrutinized by all businesses, say industry experts.