Budgeting is made even more difficult by the fact that IT investments are traditionally thought to be difficult to measure in terms of return on investment, putting them at odds with other areas of the budget and making departmental cooperation difficult. This article will help the City plan for, or restructure, an IT budget by suggesting ways to:

A. Clarify what results the city expects from IT investments.

A: Clarify What Results a City Expects from IT Investments

A city can run into problems when there is no strategy behind its IT investments. This lack of planning creates a reactionary “break-fix” type of approach that may create painful IT vulnerabilities in the City’s environment. Therefore, a city’s IT budget should, at a minimum, address and outline costs for:

• Data Backup Strategy: How is the city’s data backed up?
• Disaster Recovery: How soon will a city bring its network, servers, and user access back online when a disaster occurs?
• Hardware + Warranty Contingency: What are a city’s hardware investments (servers, workstations, etc.) and support agreements? Additionally, what is the decommission schedule for hardware as it reaches end of life?
• Internet Service Provider (ISP): Is it reliable and fast enough based on current usage?
• IT Support and Maintenance: Are the hardware, applications, and end user needs including replacing dated hardware, patching and monitoring servers and applications, and supporting the end users as they have issues being met?
• IT Consulting Projects: Are there technology offerings that can increase efficiency or decrease cost that could be implemented this budget year?
• Software License + Support Purchases and Upgrades: Are any of our existing software applications no longer supported by the vendor or need to be upgraded? Are there additional software applications that could be implemented that can increase efficiency or decrease costs?
• Telecom: Have we explored alternative solutions like voice over IP (VoIP) systems? Is our current voice provider cost competitive against others in the market?
• Training: Does our staff know how to best leverage the current technology the city has in place to help them perform most effectively?
• Staff: Are they being utilized in the most efficient manner? Do they need help?

B: Identify If a City is Overspending or Underspending.

If you examined your city’s IT strategy and found the results to be lacking, the next step should be to have your internal IT team or a trusted vendor to perform an IT cost analysis. This report will give you an idea of how much you are spending compared to the expected results, hopefully exposing areas for improvement. Once you know both of these items, you can consult the steps below to see where you fit:

1. Poor Results + Low IT Spending: Additional spending is probably needed.

   However, if you’ve been asked to cut the budget, you may not be able to spend more on IT until you’ve found other areas to cut. Look for hidden ways that the City is spending more money than it should, and factor that into the cost cuts. For example:

   • Are there manual processes that could be automated?
   • Is there equipment failure that results in lost productivity and/or costly emergency repair?
   • Is there loss of revenue due to inadequate data backups?
   • Are there delays in processing due to outdated equipment?
   
   As an example, the City Council at one of our customers asked the Public Safety Department a few simple operational questions that, due to the highly manual nature of the operations, took a great deal of manpower to research and answer. This resulted in fewer officers on the street and exposed a major area for improved efficiency. Because of this, our client was able to justify some automation purchases for the Police Department that greatly simplified future efforts. The paradox is that sometimes in order to spend less overall, you must initially spend more.

2. Poor Results + Average IT Spending: Look for ways to replace existing processes with low-cost alternatives that perform better or equal to current solutions. For example:
   • A disaster recovery service may be cheaper than tape backups that require daily support
   • Eliminate capital hardware expenses by seeking a hardware-as-a-service vendor that will provide workstations and servers for a monthly fee
   • Eliminate capital software license expenses for purchases and upgrades by seeking a software-as-a-service vendor that will provide software for a monthly fee
   • An outside service might help the City’s IT team maintain the network in a more cost effective manner without having to hire additional staff.
   
   There are many products and services today that might be appropriate for your city and even manage your infrastructure for a fraction of your current costs. Transferring some functions to a vendor could provide the immediate results you need as well as ensure that the City’s environment stays current with the latest technology.
3. Poor Results + High IT Spending: This indicates that there may be some serious and out-of-control problems in the city’s IT environment due either to poor management, poor technology choices, or both. This is a good indication that an audit by an objective third-party may be necessary.

   The auditor you select should be an expert consultant in process improvement and have experience with the technology in your environment. At the end of the audit, the city should be presented with a clear, detailed, and objective plan that can be taken to any vendor to perform the suggested work.

1. Good Results + Low IT Spending: If things seem to be operating well on a minimal IT budget, improvements have most likely been introduced that have brought costs down. This is where all cities should strive to be (even though it might seem impossible!)
2. Good Results + Average IT Spending: If everything seems to be satisfactory, the key to cutting the IT budget is innovation. Efforts should focus on looking for high-value, low-cost products and services to replace existing ones. You may have already established a routine of continual improvement and have ideas on what can be done to reduce costs. If not, begin such a program as part of a cost-cutting effort.
3. Good Results + High IT Spending: In this situation, your organization might be in the middle of a major IT investment such as a software implementation. However, if no major IT investment is underway, then cost cutting will focus on “trimming fat.” Review the city’s IT budget line-by-line, department-by-department and expect your IT department to justify each expense. Explore lower-cost alternatives to any suspect line item. There are many technologies designed to both improve performance and reduce operating costs such as:
   • Cloud Computing allows access to systems and applications from anywhere at anytime in a pay-as-you-go model and can be managed internally or externally.
   • Tapelessbackup services eliminate the need for expensive backup hardware and tapesthat require daily maintenance.
   • DisasterRecovery Services allow complete restoration of critical services after acatastrophic failure in as little as 24 - 48 hours.
   • RemoteManaged Network Services allow monitoring, alerting, patching, maintenance,and antivirus services on all hardware so that problems can be rapidly identified and addressed.
   • Softwareas a Service replaces costly software license fees and maintenance with alow monthly fee.
   • Hardwareas a Service replaces very costly and quickly obsolete computer hardwarepurchases with a rental-based hardware model. Similar to how a utility bill works, the city pays only for what it uses in a given month, throttled up and down as staff changes over time.
   • Virtualdesktops and servers replace PCs and servers by providing similar computingfor a low monthly fee and saving on energy costs.