Benchmarks, trend analysis and historical numbers are the typical ingredients to a solid budget forecast. Common practice involves percentage of revenue estimations, which take into account both sides of the balance sheet. Today, essentially all benchmarks and historical numbers are deemed as guardrails – and percentage of revenue may be the best indicator of the final forecast especially during pandemic times.
All said, one trend is clear: the percentage of revenue spent on IT has steadily increased year after year. According to Gartner, worldwide IT spending was projected to reach $3.7 trillion (in U.S. dollars) in 2019, an increase of 0.4% from 2018. Gartner forecasts that worldwide IT spending will reach $3.8 trillion in 2020, an increase of 3.7% from 2019 and will reach $4 trillion in 2021, an increase of 3.8% from 2020.* Involta believes this projection demonstrates the trend, or at least a significant increase in a previous benchmark, is here to stay for the 2021 budget cycle.
While the words “increased revenue” might get you sweating, they aren’t bad with a strategic plan in place to help manage cost – or in many cases, plan for what should be considered an investment. Investing in the growth of your business, whether from a revenue or expense standpoint, takes an occasional outlay. It’s like replacing a damaged roof on your house – it’s an investment, not an expense – and one required if you want to comfortably reside for the long-term. With a solid plan and partner, the increased spend is worth it.
As your organization heads into budget season, you should be thinking about how IT aligns with your overall business objectives and how to position 2021 so that it sets you up for the next 3-5 years. Forbes states, “All too often, leaders view strategic planning as an event, not an annual process. This results in strategic plans that are not fully implemented since, once they are done, they are seldom reviewed throughout the year.” They sit on a bookshelf rather than be considered a road map and reviewed monthly, or even weekly.
Your IT strategy can have a significant impact on your organization, either good or bad. That’s why you need to frame the vision for where you want the organization to be in 3-5 years, yet identify the pathways to get you there and how it should be managed including aspects such as structure, capabilities and competencies in the short-term through service delivery and organizational change management. Without a plan, your organization’s chances of maintaining continuous growth and success may be lessened each year. And with a good plan comes measurement. Outlining the steps to define and monitor performance metrics to prove ROI is essential.
To start developing an effective IT strategy plan for your organization, you need to ask yourself these 10 questions:
1. Do you have a 3-year technology strategy?
2. Does your organization have the funding for a technology strategy?
3. What is your current strategy planning process?
4. Are you comfortable with your current and future technology strategy?
5. Do you understand your business drivers and how they align to your strategy?
6. Is there something happening in your industry that would make you want to have a strategy developed?
7. Are you satisfied with your current ability to be nimble, get ahead of the market and be more responsive than your competitors?
8. Do you know what your clients are looking for from you?
9. Are you monitoring for technology disruptors in your industry?
10. Do you understand the unique requirements of technology presented by your industry?
The first step to any strategic IT plan is to incorporate all divisions of your organization and align around business outcomes. It’s a long-term approach. With budget season around the corner, Involta is positioned to help you align, define and design your environment to be ready – we can help you “Get There” taking people, processes and technology all into consideration. Whether through service design or through an assessment of your organizational change framework, our team is ready and available to prepare you to address your leadership team, finance committee or board of directors.
Contact us today for a discovery meeting to learn how we can help you “Get There” during budget season.
*Gartner Press Release, “Gartner Says Global IT Spending to Grow 3.7% in 2020”, October 23, 2019.