Blog / Municipal IT Budget Planning – Part 1: Introduction to Municipality Budget Planning
This is part 1 of a 9-part series that will look at selected areas of interest to Municipalities, pertaining to IT Budget Planning. Please contact me if you would like copies of other articles.
TRINUS has been working with Alberta Municipalities for more than 20 years and we often help our Clients with annual IT Budget Planning. Of course, much has changed in 20 years, especially with IT. Gone are the days of simple Client-server networks that focused on Administration tasks and Accounting. Email was a novelty; not a requirement – and the Internet was largely unheard of. Dial-up modems were used for IT-based external communications; remember the screech/squawk of those annoying devices?
However, I’m not sure IT budget planning methods have kept pace. Certainly the scope of what’s involved has grown, and it now becomes the responsibility of the Finance Team to understand such topics as Disaster Recovery, Cyber Security, Cloud Hosting, BYOD, IoT, and more. In fact, earlier in 2018, we gave a Presentation to more than 100 Attendees at the GFOA that identified over 40 IT Management topics and sub-topics. This is not your Dad’s IT system any longer.
So, in this series we’re going to identify important topics and how they might play a role in your overall IT system plan, and how to consider budgeting for them. Part 1 is going to present 3 little ideas that you need to keep in mind, as we step through this series.
But first, I want to present:
The BIG IDEA: Properly functioning and modern IT systems enhance User productivity and satisfaction, while reducing downtime. Thus, IT systems should be viewed as an ASSET worthy of INVESTMENT; not an EXPENSE to be tolerated. Countless industry studies have proven this concept’s veracity, but it’s one of the those great Head ideas that never seem to make it into the Heart of many Municipalities. IT is an afterthought, IT is a headache, IT is expensive, IT is troublesome, IT never works right; if these sentiments are common to your Municipality, then you haven’t embraced the BIG IDEA. I will leave it to you to decide how your Municipality stacks up against this idea, but I would caution this: it’s too important to ignore.
From the BIG IDEA flows these Three Little Ideas:
Little Idea #1: ALL IT systems need to be managed. There is a LOT of confusion purposely generated by IT Marketers, that cloud the area of Managed IT. Managed IT has become the latest buzz-phrase that is slapped on every corporate IT product and service sold by Vendors; it’s the sweetener to make you swallow the bitter pill of higher costs. Unfortunately, there are few definitions of Managed IT worth the breath to speak them. But let’s develop a simple definition that you can use as a guide: Managed IT is The Control of IT Assets to Maintain their Intended Functionality. Before you think this is gobbledygook, consider a simple example: your multi-function printer.
- Control the Printer: Install up-to-date print drivers on each workstation, ensure it has network connectivity and power, ensure the User Account Auditing is enabled and functioning.
- Maintain the Printer: Ensure it has paper, toner, and drums. Ensure the Manufacturer’s warranty and maintenance are up-to-date. Perform any printer maintenance on schedule. Is the firmware up to date? Is it part of a Cyber Security Alert? When is it due for replacement?
- Intended Functionality of the Printer: Is it fast enough? Is the print quality sufficient? Does it handle the correct paper format? Does it need to collate and staple?
That’s at least 16 items that need attention concerning your printer. Now multiply this by the number of devices and systems in your network, and you can start to see that a simple Managed IT statement can have a huge impact on your operations. Of course, several items pertain to budgeting, so the next time you add a budget line item for a new printer, consider deployment costs, hardware maintenance, supplies, warranty, and updates – to name a few. Other industry studies put the Total Cost of Ownership (TCO) of an IT Asset at several times it’s initial cost over its life span; installation, updates, support, repairs, supplies – it all adds up quickly.
Little Idea #2: ALL IT equipment – no matter how good – has a (maximum) life expectancy of 5 years. I am surprised by the number of Municipalities I visit that don’t conform to this simple rule; there is a tendency to cheat. If it’s working OK, then leave it alone is a prevalent motto. And equipment will work past the 5-year life span. But cumulatively it starts to show it’s age; slows down, becomes increasingly unreliable, doesn’t support new standards, the Manufacturer no longer supports it, and becomes more susceptible to Cyber Attacks.
At 7-plus years, the equipment performance becomes intolerable and it’s discarded in favour of new gear. But during the intervening 2 years, it has cost countless hours in reduced productivity and User satisfaction has plummeted. Some Users even plan their day around poorly-performing IT equipment. I have been told more than once that: I turn my computer on in the morning and I go for a 20-minute coffee break. By the time I get back, it’s just about ready to go. Or another favourite is: I send a job to the printer and I go for a smoke break. HR Managers, are you listening?
Budget planning for a 5-year replacement schedule is straight-forward. Given a list of IT Assets and replacement costs, just about anyone can whip up a spreadsheet with budget projections for 5 years. But it’s not quite that simple. Remember that IT advances at a rapid pace, so it’s not just a matter of maintaining status-quo. The crystal-ball-gazing starts by projecting IT needs into the future, and that requires knowing what Users are going to want to do in 5 years, which means knowing what applications they might need, which means knowing what the Technical requirements are, which means knowing how that will integrate with existing systems, and so on…
Little Idea #3: Your IT systems are being attacked – ALL the time and from ALL vectors. Ten years ago, viruses came on infected USB sticks (or floppy discs, if you’re old enough to remember.) They were few and far between and were treated as an annoyance. Anti-virus programs were updated about once a month. Five years ago, viruses inhabited dubious websites and were just starting to be sent as attachments to Email. But they were still the annoying variety. A good Anti-virus program could get rid of them and system-wide infections were rare. Now, the landscape has shifted completely. The advent of Bitcoin has caused a paradigm shift in virus attacks; it is now possible to collect money anonymously over the Internet, which has lead to ransomware. Cyber Attacks are now all-business; a $5 billion dollar (annual) business, according to industry reports.
This is coupled with an ever-increasing integration of IT systems and a migration away from in-house systems, as Municipalities shift to the Cloud. The third factor is that information – just about all information stored on your systems – is now mission-critical. Tolerable downtime is starting to be measured in hours; you can’t live without your information and Cyber Criminals know it. You should expect the frequency and sophistication of attacks to escalate dramatically.
We’re going to delve into Cyber Security countermeasures in more detail in a later article, but you need to keep it top-of-mind. Know that every IT budget decision you make needs to have a Cyber Security component attached to it. That increases the complexity and cost of IT systems by as much as 25%; a Cyber Security Tax if you like.
Well, that’s enough sermonizing. We’ll start dissecting critical systems and how to budget for them next week by looking at Backups and Disaster Recovery. Until then, keep one BIG IDEA and three Little Ideas top-of-mind; it will help produce stress-free IT budgeting.