Transcript for "Don't Be Befuddled by Your IT Budget": Get on stage myself. Here we go. So, we'll try this again. Welcome, everyone. Thank you very much. I'm Alan Falken, CEO of Cumulus Global. Still getting used to our new platform here, but I appreciate you joining us here whether you're watching us live or catching us on demand. Always appreciate you taking time out of your busy day and week to learn, to hear what we have to say. Hopefully, this information is valuable and and useful to you. A couple of quick things, the audio is muted. That avoids any background noise from getting in the way. If you look to the right, there's a panel on your screen, a chat, a q and a. Q and a is the best way to ask questions during the session. We'll monitor it. There's also a tab called docs. They're actually not docs. They're links to resources we have on our website, that relate to a topic here at hand, including the ability to download our IT budget workbook template, and that comes down as a Google Sheet or, you can download it as an Excel file. With that, we'll get going. Just a reminder that we do record the session, and we generally get it posted up to the website for future viewing on demand within about twenty four hours. So with the niceties out of the way, let's dig in because we're gonna cover a certain number of things today. In fact, we're gonna cover five. We're gonna focus on five steps to build your IT budget. And, actually, if you download that budget template, you'll see that we're following right along with the template. There's also a link to another ebook in there that covers these five steps as well. Okay. So what are the five steps? First, recurring cost schedule. This is where we want you to take a look and see what are the recurring costs that you're running on a month to month or an annual basis. Look at the contracts you have, look at your corporate credit card statements, look at your accounts payable. And what are you looking for? You're looking for software and hardware costs that are recurring. You're looking for cloud services. You're looking for any maintenance and warranty contracts you might have and any services and support you pay for on a regular recurring basis. This sort of tells you, what you're paying for on a regular basis. It's... This is the expense side of your budget, if you will. And we're really focusing on those recurring costs, the things that happen every year because if they've happened in the... If they're nonrecurring and they happen in the past, they may not happen again. We'll get to those nonrecurring costs and what you plan for in a little bit. Where do you find this information? As I mentioned, accounts payable, your invoices, look at your contracts, those credit card statements. And don't forget employee reimbursements. You may find that, you know, an employee signed up for a service, that they're using it for the company, they're billing it to you. You're reimbursing that expense. You wanna capture that as part of your IT budget, whether it's Dropbox or, LinkedIn premium. However you wanna capture that, you wanna make sure that's part of your schedule. And break it out in the month that it occurs. So, when you go into the template, you'll see it's, you know, 12, you know, 12 columns, one per month. If it's an annual payment, put it in the month where you either receive the invoice or you make the payment. Just be consistent. And monthly charges, copy over the month. Make sure that, you know, if the number varies a little bit each month, you're capturing those variances as well. And so that's step one, your recurring cost schedule. Once you have all those recurring costs in place, now start thinking about the replacement schedule. And this is where you look at what you own and when is it time to replace it. And so in one sense, that recurring schedule is your operating expense and what you expect to have. You capture the past, as you build those recurring expenses looking forward, adjust them for any increases that might come in. When we look at the replacement schedule, this is where you're gonna look at your full inventory of hardware, not just computers. Look at your network devices, those access points, the switches, the firewall, the router, and phones, printers, everything that you consider technology costs. If it's time to replace it, schedule out when you're gonna make that purchase over the coming year. And if you're not sure, but you think, hey. We'll probably do this in q two, Just as a rule of thumb, you can put it at the start of q two or the middle of q two, as far as what month you tap it in. But you wanna you wanna put it out there, sort of estimate when you're gonna make those expenditures. And you can decide, hey. We're gonna make it... We're gonna count that expenditure when we order the equipment because we've made the financial commitment. Or you can say, gee. You know, we're gonna buy it in April. We don't expect to pay the invoice to May. We'll we'll put it in May. So long as you're consistent in how and where you budget and you understand what the numbers on the spreadsheet mean, you're okay. And so when we look at how do you know what you're planning on replacing, maybe you've already identified equipment that you're gonna place in the coming year. If not, take that inventory that you have of your hardware, hopefully, and... Or go back and grab it. Look at any, you know, perpetual software solutions that might need upgrading or replacement as well. Look at the purchase date. Look at the warranty end date and sort of when you would expect to replace it. So, if you've got, you know, a number of laptops that are, you know, four plus years old, chances are you're gonna replace those within the next year. You're really hitting the life expectancy. Desktops might, you know, last a little longer. Servers, five to seven years. Switches really don't have a timeline. If you have a switch that's having a problem or has had an issue or can no longer be covered under a service contract or warranty, maybe it's time to replace that as well. And So this is when you're gonna plan out what hardware and what nonrecurring, non subscription software you're gonna take, during the year. Now as you're doing that, think about if I'm replacing this, can it be replaced with a service instead of another piece of hardware or software? So if you're looking and saying, gee, you know, we've got a file server that's still in our computer closet. Okay. You're running Microsoft three sixty five. You're running Google Workspace. One option would be to say, you know what? We're not going to replace that server. We're gonna move those files into, you know, SharePoint file services or Teams. We're we're gonna move it for the Google Workspace client. We're gonna move it into shared drives and make it available that way. This will actually help you manage your budget and your spending, but also give you perspective. So it's not just, hey. We have to replace this hardware. It's... Should we replace it? If so, when? If not, where is it going? If you're gonna do a migration project and you're and you're gonna engage us with professional services, give us a ring. We'll give you an estimate. You can budget for that project if you want help in professional services along the way. Again, that goes in the budget. So that's replacement schedule. Number three is clear out the clutter. And this is when you start looking at your recurring and your replacement costs and really start saying, what don't we need anymore? What can we get rid of? How can we reduce our IT spend without impacting the way technology serves our our business? First question, is it being used? You'd be surprised. Even as a technology provider, when we do this review every year, we find tools that we purchased, or piece of hardware that's there that's no longer actually being used, that we no longer need. So if it's not being used, do you still need it, or can you get rid of it? Can you pull it out of the budget, not replace it or end the subscription if it's a recurring cost? Does it provide enough value to justify the cost? Here's where we'll look and say, hey. We are paying for the service, and I'm a 20 person company. Only two people need it. Let's talk to them. Is it critical to their job? How often do they use it? Do they rely on it? Oh, it's something that they just use occasionally. Does it duplicate any features, functions, or services available in other systems or tools? This is our favorite. And this is generally where small businesses can find the most cost cutting when they go to clear out the clutter. Best example is do... Are you paying for a Zoom subscription? Now if you're running Microsoft three sixty five, you have access to Teams built in. If you're running Google Workspace, you have Meets and and chat and spaces built in. Do you need to be paying for a Zoom account? Well, what is Zoom providing? What are the... You know, given your licensing in Microsoft or your licensing in Google Workspace, what are Teams meetings or Google Meets providing? Is there... Are there features that Zoom's providing that you don't have in those other environments? And oftentimes, we'll we'll hear, yes. There is. Oh, you know, Zoom is doing breakout rooms, and our Meet... Google Meets doesn't have breakout rooms. Okay. Well, how much are you paying for Zoom versus how much would you be paying for your Google Workspace license if you upgrade it to a version where meets includes breakout rooms? And oftentimes, the upgrade to Google Workspace or the upgrade to my... You know, your Microsoft three sixty five subscription is significantly less than your cost of going with a third party. And then you'll get resistance. You'll be like, well, we're used to Zoom. We work in Zoom. That's great. Or we have a client who really prefers Zoom. Here's how you handle that. You train your users. You show them how to do... How to work in Teams or in Google Meets. You show them how to use the features that they're used to seeing in in Zoom. Clearly, you've got better integration with Meets and the rest in your Google Workspace calendar. You've got better integration with Teams and your Microsoft Outlook calendar, than you do with Zoom. You don't have some of the ICS issues that you have, oftentimes going back and forth when you're using a third party, conferencing tool. Even though both Microsoft and Google want to integrate with Zoom and do a pretty good job, there's still some limits there. So training. The objection, well, we have clients who who really like using Zoom. Great. When you go to schedule a meeting with them, say, hey. I'm gonna book this. We use Google Meets. I know you guys like Zoom. If you prefer Zoom, send us the invite and have the client initiate it. Use their account. We we talked with a small business several weeks ago, and, basically, they were holding on to nine Zoom licenses because they had one client who would, you know, basically didn't, you know... Went into Meets once, didn't think they liked it, said never again. And so the nine different people who meet with this client at different points throughout the year each got a Zoom license, and they're holding that cost. Because easily, they've said, actually, you prefer Zoom. Why don't you send the link? They have the Zoom account. They're paying for it anyways. It's easy to manage, and and it's really not rude or disrespectful or inappropriate to ask that. It's like, hey. We use Meets or we use Teams. Oh, you prefer Zoom? Great. You send the link over, and we'll and we'll and we'll meet using your preferred tool, And that works out great. And, really, that is... You know, sort of comes into the next question is can we consolidate the tools we're using and train staff on one solution? And that's sort of a rhetorical question because the answer is yes. In very few instances is... And you're not able to train staff to use the solution you're paying for and the solution you wanna use. And what if, you know, what if you have someone where it's... You know, you know, they just dig in and trench in and say, you know what? I'm never gonna use the tool you want. I'm always gonna do this. I'll pay for it out of my pocket. That's not a technology issue at that point. It's a management issue. And as as business owners and leaders and IT leaders, you have a responsibility to have your employees using the tools and services you pick as a business that you manage and that you know are secure. And so you then have a sort of a a managerial issue, an employee relations issue, more than a technology issue. We see areas of other duplication as well, oftentimes around conferencing... Audio conferencing services and phone services, where more than one service will be in play and can be reduced. We'll see people who, rather than, learning to share out of Microsoft three sixty five or Google Workspace will download or export documents and throw them into a Dropbox, hopefully, a paid version of Dropbox or box.net or some other file sharing service. But, again, why would you pay for a file sharing service when you have one, built in that's already part of the fees that you're paying to get your email, your calendar, your contacts, and your other productivity tools? Okay. The next question you should ask is, we're, you know, we're paying this recurring cost or we have this piece of hardware. Will we replace this with something new? And this gets into technology change and upgrades. And, typically, by the time you sit down to do do the budget, you'll have a good sense of it. But on occasion, when we look even internally or we work with clients to help them clear out their clutter, we'll say, hey. You know, you've been running this, you know, you've been running this system for seven years. Do you need it? Well, yeah. How many people use it? You know, three. You're you're chewing up a lot of dollars to maintain it. Can we replace it with something new? Is there a better way to provision the service? And oftentimes, we'll see that, dismantling the on-site infrastructure and moving it into a virtual desktop environment or, you know, a remote Windows desktop environment can lower costs and provide better shared access to a resource you're replacing with something new. If you're gonna replace it, pull it out of the budget, put any migration, acquisition cost, and operating cost back in for what's new. And at this point, you'll have a pretty good draft budget. Right? You've captured your recurring costs. You will have analyzed your replacement cycle, plan those in for the year, you know, if not to the specific month, at least to the quarter. You've looked at things you're you're gonna discontinue or terminate. Note when if it's a subscription, you know, what month it terminates in so you know to stop, you know, budgeting for that charge, and keep notes. It's like, you know, hey. You've got a line item in your budget, and it, you know, runs January through May. You know, off to the right side of that spreadsheet, say, hey. You know, we've canceled the subscription. It ends as of May 31. So when someone looks at the budget, they understand why it doesn't go all the way through the twelve months. Now you can, really adjust that draft budget. Right? You're gonna need... You may need to have some interim costs, such as migration costs if you're replacing a tool, deployment fees, professional services we talked about. And you, again, you wanna pull out the costs that are no longer necessary or planned in the months that they're not going to occur. And so clear out the clutter, you know, it's not necessarily a quick step if you haven't started thinking about this already, but it's an important step as well. Now it's time to step back and look at your investment schedule. Because what we've done so far is we've said, hey. How... You know, we haven't really talked about investment in IT. What we've done is operating expense in small capital expenditures. Right? We're saying, this is what we this is what we spend today to run our IT. Here's... If we map that into next year, into 2027 and clean it up a little bit and do a little bit of consolidation and housekeeping, get rid of the stuff we don't want or need, put a couple of small new things in to replace the existing functionality or, you know, do an interim, you know, an interim step or an incremental upgrade. That's one thing. Investment is where you're talking about wholesale or major changes. These will generally end up being capitalized and depreciated, hopefully, with accelerated or, you know, your... Talk to your accountant about that. But these are significant initiatives. So, for example, you've got your operating budget. You're running Google Workspace. You're running a CRM system, you've got a a tool that manages your social media and your marketing campaigns, you've got, maybe a full blown CRM system running there as well, you've got your financial system running. And, you know, depending on your business, you might have a document management or distribution management or some manufacturing management tools in place. That's your operating investment. Now you're looking at investment. What could that be for 2027? Bingo. AI. So whether it's AI or something else, you're gonna have initiatives that you want to achieve. So you might say, gee, we want to deploy AI to improve our customer service and let our customers do more self-service around ordering and managing their invoices and their payments. That's great. You wanna build a customer agent or buy a system that provides a customer agent? That is an investment. It's a project. So you're gonna take your initiatives because you may have more than one, and you'll identify each of them, and then you'll estimate. You'll estimate the upfront, you know, planning, design, development, deployment, training costs, and any recurring costs that are gonna happen on a month to month, quarterly, or annual basis for that. Okay? At that point, you're gonna look at the total dollars for that project, for that deployment. You may also look at deployment plus first year cost depending on what your CPA, your accountant, or your bookkeeper, you know, your controller advises, and you'll decide whether it's a capital expenditure or a business expense. And with those, you'll map out the timing of each initiative. So you might say, gee, you know, we're gonna, you know, we're gonna put in... You know, we're gonna move from Zoho CRM to HubSpot. And there's a, you know, there's a, a cost for the licensing on HubSpot. You look at that, and then you look at, oh, we're gonna... You know, we get a certain level of free deployment support from HubSpot or someone they assigned to us, but we wanna do, you know, we wanna be... Do some customization and use the AI right out of the bat. So we're gonna budget $20,000, in professional services to get us going. That's great. Are you gonna pay it upfront? Are you gonna pay it half upfront and half on delivery? What's the time frame? Map it out. So if there... Whether it's one, two, four, 10 payments, you know when each payment is gonna happen over the course of the year. Also note that when do the recurring expenses start. So you may sign up for a new service and they're like, hey. We don't start charging you for sixty days because that's the onboarding period. Great. When you plan out the budget, you know, you say, gee, if the project's gonna start May 1, we'll start the charges in July because that's when the first invoice is gonna come. And then you can basically total the costs by month for each initiative. Know that, you may have project costs and recurring costs happening in a month, but you can build that into the budget. Now when you do this phase, investment schedule, one, you probably wanna prioritize your investments. We like... When we talk about IT projects and initiatives and strategically helping the business, one of the things we look at is not only the priority, but the scope. Is it a small effort, a medium effort, or a large effort? We have our guidelines for what... How we define that. You you probably have your own or can develop your own or give us a call. We'll talk through and help you do that. But also, what's the level of difficulty? What's the complexity? And so we've done things, and we've helped clients do things that are large projects but relatively simple. Right? We've had small projects that are highly complex. Right? So, you know, you know, so for example, assist... Adding a simple customer bot to your website that asks if if, you know, someone needs help, captures their information, and connects them to a human. That's, you know, pretty simple. It might be a high priority, but it's also not gonna be a long duration. Now if you want a bot that can answer basic questions and... Or something that's AI driven that can look in your knowledge base and answer questions and sense the, you know, the the the chatters, the the client's sediment, they know when to go to a human. Well, it's it's a more complex project. It's gonna be longer in duration. And so understanding that, just tracking that is helpful because when you look at your investment schedule, you're gonna need to prioritize things and say, which are we gonna do first? Where are we gonna allocate the resources? If, you know, the total dollar of what you want to do or what are planning to do, does it fit within the budget or what you want that bottom line? How much are we spending on IT in the coming year to be? And how much capital investment are we willing to make or able to make. One caveat with the investment schedule piece that's pretty important is note any projects or purchases that start in the budget year and will continue into the following year. Put that note in so a year from now when you're working on your, you know, calendar twenty eight or fiscal twenty eight budget, you know you still have to, you know, carry forward those project costs into that year. Similarly, if you started a project this year that's continuing into 2027, it's gonna have payments and cost implications there. Make sure you include that in. In fact, those are the first investments you should build into the budget because those are already committed expenses that you probably can't back out of. So that's step four. Step five is consolidated results. Now you've got sheets. And if you download that template, you'll see you've got a sheet for recurring expenses, one for nonrecurring expenses, one for investments and capital expenditures if you're doing that. Now you can roll that up into a summary sheet that gives you monthly and annual totals. And this is sort of a cash flow look at what your budget's gonna be like because your capital expenditures, the cash is gonna go out. You'll accrue the total value. Your accountant will guide you on how to depreciate it, whether you can do rapid or, you know, straight line or what's the useful life of what you've invested in. All that comes into play. But this gives you those... You can come up with those monthly totals. You can generate quarterly totals, which can help for your financial reports when you say, what did we spend versus what did we budget? And you can look at that not only for the operating expense, those recurring and nonrecurring expenses, but the capital expenditures as well. And with that, now you have a a budget. Now there's certain aspects of these five steps that take longer than the other. For us, usually, you're capturing the recurring expenses, planning increases. It's pretty straightforward. If you don't have a good inventory of, hardware and perpetual software, non subscription software, and you don't have a replacement schedule, then it may take you a bit longer to work through and say, okay. Hey. My company has 21 laptops. Laptops are generally good for three, maybe four years before they're either outdated, underpowered, or they're just breaking down because the wear and tear laptops get. Therefore, we should probably look at replacing seven each year to manage our cash flow and our and our budget. Which seven would we replace this year, and what does that look... And then what seven would come next year, and can all of those seven really wait the extra year? And how do we move from this ad hoc, we replace it when it breaks, to more planned preventative replacement schedule? Those types of discussions will take a little bit more time. Similarly, the IT investment component, if you haven't thought ahead and planned out projects, you'll wanna spend some time doing that, assessing needs, defining scope, talking to experts who can provide guidance on those estimates and what that scope should be, maybe even getting quotes and seeing what would actually cost to move forward. Now that kind of planning has broader implications on how well you're managing IT for your business. We've got other resources on that. Even though we're looking at the budget view, doing that kind of planning is also gonna help you prioritize the resources you need for information services and the value it can bring to the business and how... Really map it to how well it supports your business goals and objectives. So the side effect of some of this planning from a budget standpoint is that planning effort will have broader implications for how you're managing your business and the role of information technology services within it as well. And that's really... The bonus now is you have, a budget. It's broken out by month. Now you can actually do something that's not budget related. It's operational or procedural. Build a monthly action plan. So for example, if you know you're gonna cancel a subscription to a service and you have to provide sixty days notice and you know that you wanna cancel it, the renewal date is July 1, so you need to cancel it sixty days before then, you can actually put in three months before that and a reminder to cancel it. So to build a monthly action plan of actions you need to take. Oh, you're planning on buying PCs to receive them in June? Okay. In May, you probably have to start looking for which ones you want and get quotes and get the orders placed. And so this gives you, the ability to map out timing on cancellations, timing on things you know you're gonna buy. And for projects, when you need your research done, when you need to select your solution and your vendor by, when you need to sign contracts so that the project starts when you wanted to and ends when you wanted to, given your knowledge of how the project works. And it lets you document sort of the timeline for changes, adoption, migration, etcetera. That can help you balance the workload over the course of the year as well as you've been balancing your budget. So I've covered a lot of ground. Again, please, if you if you look in the docs, you'll see our IT budget workbook template that comes down as, a CSV, an Excel, or you make a copy of it as a Google Sheet. The ebook Smart IT Budgeting Pays Off actually walks through at a high level, well, in some detail as well, the five steps and this bonus step I've covered here. And then we've got some other resources about making solid IT decisions. Now if you have any questions, I haven't seen anyone in the q and a, that's fine. It means I've either bored you or you're looking at the resources or I've done a good job. Who knows? You'll let me know. But if you have any questions, feel free to visit the resource library. We've got these resources and others as well. You can contact us. You can use that QR code or that Bitly URL to, you know, do a brief introductory call. No obligation. No cost. With one of our cloud advisers. They can help walk you through, understand where you are in the budget process, provide guidelines, help you use the template. And if you need help understanding what things may cost, we can, you know, help help with that as well and help you get well, you know, well planned and ready for the upcoming year. You wanna get in touch with me? Use my email address on the screen. I should take my phone number off. I'm bad at checking voice mail and answering the phone. I don't have a assistant or even a virtual one. So if you send me an email, I'll get back to you. If I can't, I'll have someone on my team get back to you right away. On that note, I wanna thank you all for joining, here, whether you're in the live session or watching on demand. Appreciate it. Hopefully, this has been useful information. Download the template. Download the ebook. Give it a try. If you have questions, let us know. We're here to help. Thanks so much, and have a great day.