Question

Next we need to define the major elements in a comprehensive and holistic governance of an IT spending program that will deliver benefits at all levels. By this I mean you need to determine how IT manages expenditures between its 3 spending categories (maintenance, mandatory and new development)..

Answer 1

IT expenditures:

IT expenditures refer to the total sum of money used for IT systems as well as services for the organization. It also includes compensation, construction, maintenance cost. Successful planning with IT expenditure begins before the budget is even due. It should consider some long-term needs. Last year's budget can be used as a guide here.

Importance of managing IT expenditure in categories:

• The management becomes easier by dividing the cost into categories and categories into subcategories.
• This helps in the exact estimation of unforeseen events.
• No doubt, these costs are subject to modification, but once all the necessary costs are captured it is much easier to come up with a budget that sets the parameter of success for the year.
• This also helps in avoiding any unnecessary costs.
• Identifying the categories and then subcategories help in providing the correct amount of budget sheet for every need.

Management of IT expenditures between Maintenance, Mandatory, New development categories:

1. Maintenance:

Maintenance expenditures refer to support and maintenance-related costs. It includes support for the infrastructure and the network. These are some ongoing costs to maintain the beneficial environment inside the organization and offer proper helpdesk support. Its management includes keeping in mind the costs in the following subcategories:

• Salaries for internal staff
• Benefits provided for internal staff
• Support expenditure for IT consultancy every month
• Training cost for IT staff
• WAN connection, VPN, ISP links costs
• Outsourcing cost
• Costs involved with monitoring, spam filter, patching, etc.

It also includes the cost of backup and recovery measures. After creating a list of subcategories, it is important to prioritize them. Some costs are hard to ignore as compare to others. Sometimes consultancy from an external entity might not be required. It depends on the requirements and needs of the organization.

2. Mandatory:

Mandatory expenditure includes buying essentials for the organization. Here past year's data can come handy. These kinds of expenditures are very important if the normal flow of operations is to be maintained in the organization or business. It includes the following:

• Monthly payroll for the staff
• Social security cost
• Medicare costs
• Medicaid costs

Social security and medicare are considered to be the largest set of costs in mandatory expenditures. Mandatory expenditures are called so for a reason. One of the reasons is that the programs or services that come under this category of expenditures are governed by law.

Unless the policy has been changed, it becomes second nature for the higher authority to perform mandatory spending because of their importance.

3. New development:

This part is necessary for building a long-lasting brand. It also helps in keeping your focus on the required efficiencies. Coming up with new ideas and keeping up with the advancements in technology is crucial for the growth of any organization or business.

• This category includes spending on new hardware, server, security server, firewall, laptop, etc.
• It also includes buying new software, antivirus, licenses, etc.
• Software costs require critical planning for the growth of the organization.
• It also includes project planning for the coming year.