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Calculating Your Technology Budget
Instructions to help you design an IT budget
February 3, 2006
Editor's Note:
Although the Technology Budget Calculator uses pounds (£) to illustrate typical costs, you can substitute these for any currency. This worksheet also assumes you're calculating in VAT (Value Added Tax), a type of sales tax. If you live in a country that doesn't require VAT, simply use the amount listed in the "Organisational total per annum" cell to determine your annual technology budget.
Organizations need to have a realistic annual budget for IT. This article provides instructions for using our downloadable Excel spreadsheet to provide you with a simple way to calculate your IT budget.
The spreadsheet breaks down the items of expenditure into the following areas:
- Hardware and Infrastructure
- Software
- Internet
- Training
- Support
- Consumables
- Other
The calculator works on the principle that you need to replace certain items at different times -- a computer lasts, on average, around four years, whereas cabling may last 10 years or more. Software may need upgrading every four years, whereas ADSL access is payable every year. The calculator takes all this into account. If you disagree with any of these, you are free to change them.
Typical costs for each item have been inserted, but;you can easily change these. If, for example, your external support costs are £1,000 [$1,750] per year, insert this in the appropriate place. If you don't have a server, put "0" in the cost cell. If you have two servers, you'll need to raise the amounts accordingly. And so on...
The spreadsheet has been set with a default number of users to 10. If you only have, say, five users, change this in the cell B3 to "5."
The section marked "Other" allows for items that are individual to you. If, for example, you have a Web designer who keeps your Web site up to date, that would be a shared cost among all your users, and it would go into one of the last two rows. If you buy design software for one user, that would be one of the user items marked "1."
Once you've made all these changes, you can see the amount you should be budgeting at the bottom of the spreadsheet. Figures are rounded to the nearest pound, so there may be some differences. If you are not VAT registered, you'll need to include VAT in your budget total. The calculation assumes that you pay VAT on everything, although this may not actually be the case.
If you have a special project budgeted for the year, for example replacing all your old monitors with flat screens or a new Web site, then this is better budgeted separately.
Article published in collaboration with London Advice Services Alliance (Lasa) Knowledgebase, your free online guide to IT for the not-for-profit sector.
