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Planning Your 2021 Office Technology Budget

Justin Kline
09/15/2020
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It’s probably not surprising, but uncertainty about the economy is forcing a lot of companies to change budgeting plans for 2021. According to a new survey, 20% of directors are unsure of their IT budgets, up from just 9% last year. And almost two-thirds (62%) said that they would have to tighten their 2021 technology budgets because of COVID-19.

As budgets tighten, organizations must prioritize and get the most out of what they can spend. The good news is that with savvy investment and outsourcing, companies are finding ways to do more while spending less. If that sounds too good to be true, consider these options.

SPEED UP YOUR PLANNING CYCLES

There is no such thing as an annual budget or plan that will survive until the end of the fiscal year. That is especially true this year, and businesses need to approach 2021 budget planning with more flexible options. Planning is still critical, but your attention needs to be on how to speed up your planning cycle. The more quickly you can analyze and adjust the implementation of your plan, the more you will be able to respond to developments along the way.

Businesses can go ahead and create high level targets for a budget but need to create a feedback mechanism regarding the success of the plan. That could be quarterly or monthly reviews where your finance and IT teams can review metrics and leading indicators. If a key performance metric is not meeting a goal, then adjust your tactical plan to match new realities.

ROI IS KING

In 2021, identifying Return on Investment (ROI) will be more important than ever. Line items which are unproven when it comes to driving revenue and margin should be cut. It is critical to show the outcome, but also understand the impact of individual line items.

The basic formula for ROI is to calculate the net gain against cost. Of course, the true impact of an ROI analysis is slightly more complicated. To start, you should determine the possible immediate and long-term benefits of your technology solution. Given economic uncertainty, remember to consider the following:

  • Why does your organization need the technology investment?
  • What is your organization trying to accomplish within the industry? How will the new technology help you accomplish these goals?
  • Can you quantify the impact of new technologies in terms of ROI?

To understand ROI, you must invest in the tools to track outcomes, as well as the talent to manage it. Tracking back to revenue can be complex, especially if you are facing a lot of disparate systems that don’t necessarily speak to each other. Create a plan which will move you closer to that end outcome.

TRUST MANAGED TECHNOLOGY

One source of budgeting flexibility comes from by cloud-based apps and services that makes it possible to continue doing business without investing in infrastructure. In fact, a new survey found that 32% of IT budgets will be invested in the cloud. Because the cloud is subscription-based, companies pay a monthly fee to operate on the cloud. Some businesses are afraid of a significant monthly bill. But what they may not realize is that they’re already paying large sums for their IT infrastructure by trying to buy, manage, maintain and upgrade themselves. Cloud services eliminate all that overhead.

Similarly, more companies are looking to manage their printer fleets with Managed Print Service. Managed Print Services (MPS) save companies anywhere from 30 to 50% on printing costs. Did you know that office printing consumes 1-6% of a company’s annual revenue? That means a $100 million company is spending up to $6 million just to print[1]. The good news is that Managed Services are easy ways to have predictable costs and cost reductions in your print infrastructure.

FIND NEW OPPORTUNITIES                                           

It may be counterintuitive to look for new opportunities when simultaneously retrenching. But after most recessions, companies that are positioned to service their customers now and later are more likely to create brand loyalty and come out ahead during the recovery phase. When faced with budget cuts, continue to invest in existing markets, but now may be the time a new market is opening to you. It may be tempting to throw out annual technology budgets this year, but resist the urge to give into uncertainty. By understanding how and when you will adjust your plan, you will equip yourself to make decisions which will maximize impact.

Look for items that can be reduced or reallocated to either make room for other new expenses or show some sort of savings for this upcoming year. Executives and CFOs want to see a lean budget that has already been thinned. Leave out unnecessary items and look to invest in untapped revenue streams, which can set your company up for larger, more sustained growth once the economy rebounds.

Clearly, a “set and forget” 2021 annual plan will not succeed in the face of uncertainty and rapid change. But if you are looking for help in reimaging your technology spending for new realities, talk to the business process experts at the Gordon Flesch Company. Contact us today for a free, no-obligation assessment.

[1] Gartner Group and Infotrends

Managed Print Cost Savings Stat Graphic

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