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I am a very new, highly inexperienced System Administrator. Regardless of any of this, I have been tasked with being the entire IT department at this small business. I must come up with some sort of an IT budget. I have some ideas, but would like some advice on creating a budget and presenting to management.

I thought about doing tech refresh for both the company and the employees. Thinking of maybe 3 new computers per quarter next year, this would give about half of the employees new computers next year. Some of them are running fairly old systems. Also I need to replace a UPS, buy a new primary router and perhaps upgrade a server running all of our VM's. I would just sort of mash all these numbers together and add 10% or so, but I have no real idea what I will need.

The company has about 20 employees. We have a main server (Windows 2003) that does our routing, dns, dhcp, filesharing, etc. as well as a rack of servers for other various functions.

I do not expect an exact answer for this scenario, just some guidelines and assistance would be helpful.

Thank you very much for your time. I will attempt to answer any queries as soon as possible.

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If your company is willing to spend money, do not forget about misc items that get replaced throughout the year. Keyboards, phones, mice, network cables, desktop UPSs, monitors/lcds, etc... the list goes on. Do not forget about proper software licenses. Licenses make up over 60% of my IT budget. –  xeon Dec 1 '10 at 23:05
    
Definitely something I did not think about. Not sure if licenses are part of my budget or each project individually. Thank you. –  shagism Dec 2 '10 at 0:47
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6 Answers

up vote 11 down vote accepted

Firstly is this a CapX budget (hardware/software/sometimes maintainence) or an all encompassing(everything you could possibly need including salaries, travel, training, etc) budget?

Since generally IT budgets are CapX i'll stick to that below.

You can't do this in a vacuum, you need to talk to the business side (CxO, managers, etc) and find what projects they have in mind for the coming year, also what at the pain points for them as far as the computer systems go. After you do that, you need to sit down and look at the infrastructure to see what needs to be updated and/or maintained. Also make sure you catalog what maintenance renewals need to be renewed.

The next step would be to make a list of must have equipment and software as well as a list of nice to have equipment and software.

Now that you have those lists throw them into a spreadsheet some header fields to get you started are: Product - Quantity - Unit Price - Extended Price. Add what you need to make the spreadsheet work for you.

Now go out and get quotes on EVERYTHING - yes everything - and toss the pricing into the spreadsheet. Don't include any discounts the sales people say they can get you and ask for either a separate line item for the discount or two quotes, one discounted and one list price. Also, be honest when they ask you your purchasing time frame just say "I'm just pulling together next years budget right now, so the best I can tell you is sometime in the coming year."

The sum of all of these is your Budget. Make sure you have your list of "Nice to haves" ready for when you bring it to the boss, it's the stuff that you just don't fight for when the knives get put to the budget.

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Thank you for your input. I appreciate it. –  shagism Dec 2 '10 at 0:45
    
It is a CapX budget I believe. I don't think training and travel and whatnot are covered under my budget. I think they are looking for a hardware budget mainly, since most of the software can be labeled as being for a particular project. Although maybe generalized software stuff, like Operating Systems, would go under my budget. This is all really good information, thank you. –  shagism Dec 2 '10 at 15:20
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There are at least two areas you need to think about Capital expenditure (e.g. buying things like hardware, and possibly including software in this) and a consumables/operating budget for things that you expect to use in normal daily work (e.g. printer toner, possibly include mice & keyboards in this, etc). Decide what needs to go into each budget (do you want to rent or buy hardware, for example).

Think about how much it costs for consumables per month and use that to give a figure for that budget, but be aware that some months will see higher use of certain items than others (for example, printing/toner costs might go way up at certain intervals if you have big print runs at certain times of the year).

Think about lifetimes/replacement schedules for both hardware and software - if you want to establish a 4 year life-cycle for workstations then once you establish this routine you might be able to work out a regular replacement schedule and cost each year instead of 'shocking' the business by buying large amounts of equipment "every now and again".

One of the most important things is, as Zypher says, that you can't do this in a vacuum. You need to talk to senior people to establish what their needs, expectations and projects are, and you need to obviously know what realistic amounts are to look for in your budget (no point in asking for money that simply isn't there) and you need to feed back what you can deliver for that amount - most internal conflict in business over things like this happens when people don't understand one another's expectations.

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Thank you very much. I will probably have a question or 2 in the morning. –  shagism Dec 2 '10 at 0:45
    
I never really thought about the consumables part, I am not sure that is what they are looking for, I'll have to ask. I was under the impression that toner just sort of fell into the "Need to have" part of the business –  shagism Dec 2 '10 at 15:21
    
Well toner is a "need to have" but it has to be accounted for on someone's balance sheet. And in most places it's centrally purchased by IT -- even if it's cross-charged to others after its purchase. Planning IT consumables centrally like this might help reduce operating costs for the company (bulk buying instead of buying in bits and pieces, for example) and/or show if things like leasing printers makes economic sense, etc. –  RobM Dec 2 '10 at 15:46
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You might consider leasing your hardware. Many accounting-types like the consistency of the monthly note. From the tech side you get the bonus of new hardware every 3-ish years.

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I have thought about that, but am confused about getting that started and what we would do with our current hardware –  shagism Dec 2 '10 at 0:46
    
I believe Dell finance department can handle this. I also think they can put you in touch with the people that allow you to make a single system image that you send them and they will put onto all the machines you order. I haven't investigated this, but it sounds pretty optimal if you have to replace more than a few computers a year. Although, I don't know how it handles Firefox, Flash, Reader, Java, etc. updates. –  minamhere Dec 2 '10 at 4:06
    
Interesting. This is a very interesting idea, I think we have an account with Dell so maybe I should call and just get an idea of what a quote would be. –  shagism Dec 2 '10 at 15:22
    
There are two sides to "what to do with current hardware?" From a business/accounting standpoint, after a certain period it has lost its tax benefits and those types don't really care what happens to it. From the tech side, I always use for secondary services, backups, experimentation, dev, etc. Or wipe and donate to others who can use it. –  Keith Stokes Dec 3 '10 at 2:01
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All suggestions are great.

I'd just add that before opening google with a calculator in your hand look around you for delicate places where you seriously need backup and/or fault tolerance.

Do you have applications that run your business? Important databases? A huge mailserver? An active directory?

Think something like: "What happens if my proxy server dies tomorrow? Am I ready to replace it? In how many hours? Do I have a backup solution to allow my users to surf the internet while I put it back online?"

While you answer to those questions you'll find that some key services or personal computer or important files are not backupped or in fault tolerance. I'd definitely start from there: save your ass in cause of trouble. It's easy to get money for that because none wants a dead office, no?

Done that focus on your inventory. You don't have it? Do it. With patience and focus, wisely.

Use spiceworks: it's just great.

Test your lan segments to see if there's a nasty 5 euro hub hidden somewhere and...

I hope I've been able to express my idea :) Start from that. Then interview both bosses and users and try to make them happy allowing them to achieve their aims and daily task in a much easier and productive way: that's why you're there.

Have fun and good luck :)

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Very interesting points. Thank you for your input –  shagism Dec 2 '10 at 0:46
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I am in a similar situation. One thing that I have found helpful is creating a spreadsheet every month with different priority levels for all the things you want to buy. I use: "ZOMG! MUST HAVE!!11", required ASAP, should buy soon, buy if we have money, and this is a low priority purchase. (You could rank them 1-5 if you wanted to be more professional :))

This allows you to see what types of items you buy on a monthly basis and if you put them all together over the course of the previous year, it helps to see what types of items you tend to buy on an emergency basis and what lower priority items you buy over the course of the year. If you include computers and licenses on these spreadsheets, it should aggregate nicely when you look at an entire year's worth at once.

A few lessons:

1) When you make these spreadsheets, include applicable warranties, tax, and shipping in all costs. Round up to account for price adjustments and things you forgot.

2) Know that a certain amount of your required budget items will be vetoed by someone that controls the money, knows very little about what you do/need, but you still report to him. He will take the flak if something fails because you didn't replace it in time. You need to give him enough flexibility to cut out items from your budget while still ensuring you can complete all of your goals and replace things that need to be replaced. This is a fancy way of saying "put more than you absolutely need on your initial budget because you will never get more than you ask for, and you will always get less..."

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That seems to be a common answer. That I should put some items on my list that are a reach so that someone could cut that and I still get what I want. Thanks. –  shagism Dec 2 '10 at 15:24
    
Also, make sure those items are things you actually do need. In the rare situation that they do get approved, its good to actually want the things you are buying. No reason to buy stuff just to buy it. :) –  minamhere Dec 2 '10 at 19:20
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You may also want to check out InfraSage's on-demand ITM suite (www.infrasage.com). It allows you to create IT budgets, IT Forecasts and IT Spending reports. They also offer 5GB of cloud storage free at this point.

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I will check out that website. Thank you –  shagism Dec 2 '10 at 15:23
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