Special Feature
Part of a ZDNet Special Feature: Tech Budgets 2021: A CXO's Guide

Five budget mistakes to avoid during COVID-19

Learn how to avoid common budget mistakes as you plan for 2021.

Business pressures of the pandemic hit IT departments hard

Thanks to COVID-19, IT decision makers will find themselves in uncharted territory as they plan their 2021 budgets. This predicament implies that budget mistakes may occur. But that doesn't have to be the case.

Here are five common budget planning mistakes and how to avoid them.

Special Feature

Special Report: Tech Budgets 2021: A CXO's Guide (free PDF)

COVID-19 has accelerated trends like remote work and digital transformation, and forced IT leaders to adapt their budgets accordingly. Our Tech Budgets 2021 special feature examines how business leaders are spending their tech dollars.

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Mistake 1: Losing site of ultimate goals

Don't lose sight of the work you ordinarily would have planned pre-COVID-19. Because of COVID-19, many IT budgets will either maintain or have incremental increases in their budgets. However, this doesn't mean that you shouldn't share important IT initiatives. While you may not receive funding for every ask, you will place a marker in people's minds about projects that needs to be tackled in the future.

Mistake 2: Failure to engage others

The influence of citizen developers and business departments outside of IT regarding IT decisions -- including technology purchases -- is increasing. CIOs and IT budget planners might initially resist this, but they shouldn't.

When I was a CIO in a manufacturing company, I wanted to upgrade our sales and marketing systems, but I couldn't obtain the money in the IT budget. I spoke with the sales and marketing vice president, who said he had some availability in his budget to fund the new systems. We pooled together funds and got the project approved.

The lesson is that IT budget planners should meet with budget planners in departments outside of IT to explore the possibility of jointly funded projects. This is a counter-approach to what often occurs in organizations, when different departments go against each other in the chase for funding.

By working with other departments, you can collaborate and collectively survive the budget belt tightening in 2021 that will likely result from the COVID-19 crisis.

Mistake 3: Forgetting about networks

A popular budget approach for IT is to heavily fund applications -- and then budget for network upgrades. However during COVID-19, network services supporting remote work and collaboration took off and will likely continue as critical company technology. Network security to protect communications and intellectual property in remote work environments is also equally important, as is 5G bandwidth. All of these factors makes it easier to argue for network project money in 2021.

Since IT budgets are expected to remain relatively flat for 2021, reallocating a greater portion of the IT budget for networks can be presented as a short-term strategy for dealing with the demands COVID-19 has placed on networking and remote work.

Mistake 4: Ignoring the edge

The move to the edge is happening so rapidly that you can't afford to ignore it in 2021, even if budgets are tight. The Internet of Things (IoT) will pick up -- and so will the need to offload storage and processing at the edges of IT. This also means that security, storage, networks, processing, applications, appliances, and so on, will be needed for the edge. IT budget line items will need to address this.

Mistake 5: De-emphasizing training

Since training is an entirely discretionary expense, it's easy to eliminate it on the budget. Avoid the temptation to do this. While you may defer training to the latter part of 2021, don't eliminate staff training plans unless you absolutely have no choice.

The digitalization of enterprises, the adoption of IoT and edge technology, automation, artificial intelligence, and machine learning all require new IT skills. Your staff will likely need training in some of these skills.

By investing in your staff, you have a better chance of retention. It costs one-half to two times the salary of an individual employee when you replace an employee. Not to mention that you lose knowledge and skills from each employee departure. Retaining your staff matters.

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