We’re halfway through the year. Is your existing technology budget looking a little worse for wear?
Many organizations set their technology budgets before the start of a new year, only to see the numbers they so carefully crafted become about as helpful as a paper bag in a rainstorm.
Technology moves at such a rapid pace that we can’t always put off new opportunities or solutions to challenges until next year. This doesn’t mean budgeting for technology is a waste of time. However, you could likely benefit from adding a quarterly forecasting approach to your budgeting process.
Let’s look at how to perform quarterly forecasts and how they can benefit your firm.
Proactive planning and flexibility
Many firms set a technology budget annually. If you operate on a calendar year, you might establish your budget for the coming year in September or October.
The annual budget lays down a crucial stake in the ground, allowing you to plan your financial commitments in advance and ensure you allocate resources towards strategic initiatives.
However, it’s important not to view your budget as an inflexible constraint. Instead, think of it as a flexible guideline that adapts to new opportunities and challenges.
Taking a quarterly approach to budgeting and forecasting ensures the firm remains responsive to new technology advancements or shifts in business needs. For example, say you have an opportunity to acquire another firm or find a solution to a long-standing challenge. You can’t always wait six, nine or 12 months to budget for the costs.
Budget overruns will occur, so it’s essential to provide context to the team and ensure all stakeholders understand the reasons behind the overspending and how it aligns with the company’s strategic goals.
Evaluating strategic projects
Quarterly forecasting also facilitates regular review and reassessment of specific projects. For example, you might revisit ongoing discussions around licensing costs and their impacts on the firm as part of your forecasting process. This approach allows you to balance expenses against revenue, ensuring you maximize opportunities without being constrained by the initial budget you set months earlier.
For example, at Boomer Consulting, Inc., we recently implemented a new Customer Relationship Management (CRM) system. Prior to the implementation, we were using multiple systems for different aspects of sales and marketing, and those systems didn’t always communicate with each other, leading to inefficiencies and manual handoffs.
As part of our quarterly forecasting process, we evaluated the overall return on investment (ROI) of a unified CRM system. It was worth the expense because it allowed us to eliminate multiple other systems, streamline processes, reduce complexity and improve client engagement.
Encouraging innovation and managing complexity
Accounting firms are technology-driven environments, and firm leaders need to foster innovation while managing complexity. High-functioning, tech-literate individuals within your firm want to seek out and test new technologies. Without a flexible budgeting approach, these initiatives can lead to the rise of shadow IT, where employees use unsanctioned tools, increasing risk and complexity.
Consider allowing departments to expense a certain amount to the tech budget without prior approval. This can encourage innovation while maintaining oversight. Quarterly forecasting allows you to regularly assess these pilot projects and determine their potential for broader application across the firm. This approach promotes a culture of innovation and ensures that the firm stays ahead of technological trends.
Adapting to rapid technological changes
Technology evolves quickly, and firms must be prepared to adapt swiftly. The recent surge in AI tools like ChatGPT and Microsoft Copilot is an excellent example of how quickly new technologies can emerge and gain traction.
Quarterly forecasting allows you to evaluate these tools' relevance and impact regularly. Consider regularly surveying employees to understand their interest in various tech tools and applications. This can help you uncover additional avenues for innovation and ensure you’re leveraging the latest advancements.
Quarterly forecasting in technology budgeting isn’t just a financial exercise. It allows you to remain agile, adapt to new opportunities and manage resources efficiently. Set your annual budget with the best available information but stay flexible. Then, you can make informed decisions that balance cost, benefit, ROI and overall efficiency. Technology drives business success, so quarterly forecasting ensures your firm stays competitive and innovative, ready to confidently embrace the future.
Do you want to hone your leadership skills beyond technology?
The Boomer CIO Circle is a peer group for Chief Information Officers in the accounting profession. Together, they work on growing their skills in innovation, budgeting, finance, communication, project management, marketing, sales and human resources to grow into confident leaders in their firms. Apply now to start building valuable long-term relationships with other forward-thinking CIOs.
As Technology Manager for Boomer Consulting, Inc., Chris Rochford leverages a diverse background in web development and technology consulting. His role involves managing Boomer Consulting, Inc.’s internal technology, as well as researching how new and emerging technologies can be leveraged internally and for our external clients.
Before joining Boomer Consulting, Inc., Chris spent 15 years in tech, doing web development for state and local government agencies and commercial clients.
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