5 Questions to Ask When Planning an IT Budget

Once a year, IT leaders are hard at work carefully planning their budgets and overall technology strategy. Since IT costs are a sizable component of an organization’s budget, planning for these expenses is challenging.

To gain a better perspective on the IT budget planning process, Service Express CIO Todd Piper sits down to address the topic.

According to Gartner, worldwide IT spending is projected to increase by 3.4% in 2020. CIOs must prioritize managing their IT costs, identifying areas of opportunity and aligning their budgets with core business objectives.

Tackling IT budgeting and challenges – what to ask before you start:


  1. What is IT budget planning and why is it important?
  2. What are key goals when planning an IT budget?
  3. Which areas should be focused on when IT budget planning?
      A. What is included in an IT budget?
      B. What are the differences between CapEx and OpEx?
  4. What are common IT budget planning challenges?
  5. How have IT priorities shifted and why?
Todd Piper, Service Express CIO explains IT budgeting best practices
Todd Piper, Service Express CIO explains IT budgeting best practices
Todd Piper
Chief Information Officer, Service Express
  • Responsible for developing and executing IT strategy
  • Over 30 years of IT experience
  • Areas of expertise: global application implementation, IT security, IT budgeting, data center management

Q: What Is IT Budget Planning and Why Is It Important?

IT budgeting is the process of aligning business strategy with overall technology requirements. Once the needs of each department have been defined, IT leaders allocate resources to support the strategy.

Before I start the planning process, I ask myself a few key questions:

  • What are the top company initiatives and how does IT make those happen?
  • What value does each project add to the business?
  • What department does IT need to partner with to make this a success?
  • What baseline costs did I have last year that will continue this year?
  • What resources will we need to plan the budget?
Todd Piper
Chief Information Officer, Service Express
  • Responsible for developing and executing IT strategy
  • Over 30 years of IT experience
  • Areas of expertise: global application implementation, IT security, IT budgeting, data center management

Q: What Are Your Goals When Planning Your IT Budget?

One of the biggest challenges I face when budgeting is identifying and balancing other priorities within the organization to build a successful plan. That’s why I actively prioritize our goals to keep us on track during the process.

  1. Creating a budget that is accurate month-to-month and year-to-date
  2. Setting time aside with leaders to prioritize their technology objectives
  3. Aligning the budget with large business objectives
  4. Discovering gaps in technical support capabilities
  5. Identifying outdated equipment and business applications to increase uptime and productivity
  6. Establishing executive and board-level expectations

The most influential decision-making driver for IT professionals today is price according to our 2021 Data Center & Infrastructure Report.

Q: Which Areas Do You Focus On When IT Budget Planning?

Similar to a personal budget, IT budgets include line items that leaders use to allocate expenses. Each line item plays a role in helping leaders determine their maximum spending in every area.

What is included in an IT budget?

Categories for successful IT budget planning

The line items above nest underneath two main types of business expenditure: CapEx and OpEx. These business expenditures account for a range of recurring expenses and day-to-day expenses that keep the business running. CapEx and OpEx help us prioritize our investments to align with business objectives.

What is CapEx?

Capital Expenditure
CapEx represents assets and resources that are intended to be used for more than one year at a one-time cost. These may include new computers, phones, vehicles, or large-scale initiatives.

What is OpEx?

Operating Expenditure
OpEx expenses cover the day-to-day costs of running a business. These include rent, wages, SaaS subscriptions, utility bills and more.

Q: What Challenges Are Involved When Creating an IT Budget?

 Identifying Requirements & Costs by Department
A majority of each department’s technology costs are allocated in the IT department’s budget. To create an accurate budget, accounting for each department’s needs is critical. It is your job to guide each department lead to agree on their top priorities as it relates to the company’s goals. As an expert in IT, you are responsible for negotiating conflicting priorities and expectations for ongoing expenses and new projects.

Balancing the Company’s Goals & Objectives
With so many department priorities, it can be a challenge to allocate budget requests to a value-centered approach. A common budgeting structure I use is the Run-Grow-Transform model–where IT leaders can identify their spending into the Run, Grow or Transform categories. This creates a high–level view of the transformative tactics that are being implemented in the department.

Allocating Time for Planning
At Service Express, we start planning our IT budget six months in advance to allow for enough time before the new year. Setting the time aside to plan for the upcoming year is absolutely necessary. Starting early gives me enough time to thoroughly plan and meet with other leaders in the organization and be able to incorporate their feedback. The ample time is also helpful in determining and preparing how to go about asking budget questions during the budget meeting.

Q: What Shifts Have You Seen in IT Priorities?

In the past ten years, IT priorities have shifted with the introduction and rapid adoption of new programs and technologies. According to Gartner, Enterprise Software or SaaS will grow by 10.5% in 2020 — resulting in a 2% increase from 2019.

The implementation of SaaS, cloud services, and heightened security practices have directly impacted OpEx budgets — requiring additional funds to support the shift in new business operations and priorities.

According to our 2021 Data Center & Infrastructure Report, 72% of IT professionals agree their top challenge is budgeting and finding cost-reductions.

Changes in IT spending vary among industry and organization revenue. To gain a better understanding of the holistic shifts in spending, below are the top priorities of over 500 IT professionals throughout the U.S. according to our 2021 Data Center & Infrastructure report.

IT Budget Priorities 2021
IT professionals in meeting to decide IT budget priorities

To be a better business partner, IT leaders must project their worth by driving value. One of the key components of IT budget planning is ensuring you’re integrated with each department to determine upcoming priorities. It’s important to remember that IT budgeting is a cross-departmental collaboration. Finding areas of opportunity will put any IT leader well on their way to creating a more robust department and in a stronger position to contribute to the success of the organization.

How Can We Help?

Learn more about expert data center maintenance solutions.

Additional Resources

Five Factors in Reducing IT Maintenance Costs >

How to do more, spend less, and reduce IT maintenance costs.

How CIOs Can Better Align With Business Objectives >

To promote greater performance, CIOs must develop a strategic plan for their IT departments to work closely with each business unit in order to understand the objectives and the operational plan to achieve goals.

Agile IT Management: Change Direction & Accelerate >

Agile IT management focuses on agility in terms of the ability to stop, change direction, and accelerate.

2021 Data Center & Infrastructure Report >

Find IT priorities, trends and insights in our 2021 Data Center & Infrastructure Report.

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