Stabilize Your IT Budget
Firms that treat technology as capital assets typically evaluate purchases on an annual basis. Some
years, purchases are made; other years, purchases are put off. As a result, peaks and valleys develop in
their IT budgets: This scenario makes IT acquisitions a major decision. Recessions or other financially difficult periods may cause delays. And as the firm’s technology approaches obsolescence, purchasing delays put a strain on the IT department’s resources. Additionally, capital planning is typically done yearly. What happens if a mid-year purchase is required?
The result is that technology budgets become unwieldy at best and unpredictable at worst. Treating the purchase of IT assets as a capital expenditure sets the stage for reactive long-term planning rather than strategically focused long-term planning.