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Technology is an investment that helps lead to success
Some small businesses do not look at IT spending as an investment. They look at it as an expense. However, more small firms now understand that technology spending is a way to increase productivity and reduce costs, making the company more flexible and responsive to customers.
 Link IT costs to productivity
Experts say that as companies grow, they tend to view IT as a means to boost profits rather than as an empty cost center. One of the IT manager's responsibilities is to continue to ensure that the IT budget reflects the CEO's "hot buttons" and top management's priorities. These often include revenue and business growth, improving customer service and reducing costs through productivity gains and standardized configurations.
Ad hoc can hurt you
Many business owners fail to do any IT planning, operating without an overall strategic philosophy and buying only when the need strikes.
In a Forrester Research survey last year, more than 20 percent of participants representing companies with six to 99 employees did not know whether their IT budget would increase or decrease in the coming year.
"Small businesses tend to be more ad hoc in their approach to IT," says Meredith Morris, a Forrester analyst in Cambridge, Mass. "Medium-size businesses are looking to get bigger, so they invest more strategically."
IT budget preparation
How does a small business go about crafting an IT budget? Linking technology spending with concrete customer service improvements and productivity gains is a key starting point.
For instance, equipping "traveling revenue-generators" — mobile workers who call on customers — with powerful laptops that perform like workstations can pay off in greater productivity on the road.
Most experts agree that effective IT budgets are ones that are based on a percentage of revenue, anticipate business growth, improve customer service and identify projected cost reductions.
Another tip: Talk to line-of-business managers, such as those in sales, to determine whether the proposed annual purchasing schedule mirrors their needs around business spikes and key crunch periods.
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