Providing Affordable IT Management to SME's Creating a 3 year plan
In the first instalment of this topic we started to build up a picture of our IT budget by identifying all of our IT services and getting a starting point of our costs. The aim going forward is to start planning a cost reduction program. The risk here (and as with most things when you are running your own business) is the fact that “unexpected” items come up and catch you out. You then find that you have to find the money to deal with them. In this thread I would like to give some guidance on projecting forward from year 1 to create a 3 year plan (as the basis of our cost reduction exercise). So hopefully by now we have a spreadsheet with all of our identified IT items and cost for a single year.
Step 1: add a new column for year 2 and year 3 and copy the year 1 cost plus 3%. There are lots of measurements that different organisation quote (inflation, CEL, CP etc) but the majority tend to put their annual inflation index at between 2.5 and 3%
Step 2: Take a good look at all of your hardware (printers, PC’s screens, keyboard, mice etc) and ask yourself the question “am I going to need to upgrade this in the next 3 year?”. If so create a new line on your budget for “procurement” and against each item you think you are going to need, research an indicative figure and against the year you are going to need to replace it, pace a value
Step 3: Look at all of your software and ask a similar question. Consider the fact that Vista has come out soon or you may want to upgrade to Norton 2008? We are starting to touch on release management now, but for present take an honest look at all of your applications and in a similar way if you think you are going to replace it, research the current cost and predict when you are going to replace it
Step 4: Think about your business strategy? Are you planning to expand? Are you going to emerge into new areas? Are you consolidating your operation releasing spare assets?
All of this should be fed into your 3 year plan. Now we have a more accurate view of your IT spend over the 3 year period. You may want to put some totals in place and compare this as a percentage of your turnover / profit? So what’s next?
Well really we want to look at opportunities to reduce this spend. Really this can be achieved in one of 3 ways: 1) Reduce the level of service (therefore reducing support costs)
2) Look for opportunities to move services / procurement to a supplier which offers better terms / value
3) Re-evaluate the need for the spend The next thread will start to look at how we can define the service we have and what we want to start planning our cost reduction program.
16th May 2009
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