The CTO’s guide to building a tech budget for 2024

Budget planning can be a challenge, especially when trying to predict your business’s future needs. It’s crucial to have a plan in place to ensure you have the resources you need to support your company’s growth.

Tech leaders are bullish on IT spending in 2024, with 84% expecting their budgets to increase, up from 66% last year (see figure below). Businesses should focus on what creates customer value, eliminate inefficient complexity, and experiment with new ideas to differentiate themselves from the competition.

As generative AI has taken the world by storm, now is not the time to be passive. Artificial intelligence automates tasks, creates new products and services, and shakes up entire industries. Instead, 2024 should be about investing in technology to drive growth.

Key areas to consider when creating your 2024 budget

Before you start developing your tech budget, it’s important to consider the key areas that will impact your spending. These areas include your business strategy, the current technology landscape, the impact of new technologies, cloud migration, security, and other stakeholders. Understanding these key areas helps you make better judgments about your budget allocations.

Align with business strategy

The first step in budget planning is understanding your company’s overall business strategy. What are your goals for the next year? What are the biggest challenges you face? Once you have a good understanding of your business strategy, you can start thinking about how technology can support and drive those objectives.

Involve other stakeholders in the budgeting process

Get input from your team, as well as from other departments such as sales, marketing, and finance. This will help ensure your budget aligns with the company’s needs.

Assess your current technology landscape

Once you know where to go, you should assess your current technology landscape. What technologies do you have in place? What are your strengths and weaknesses? What are your pain points? This assessment will help you identify the areas where you need to invest in new technology or upgrade your existing systems.

Consider the impact of new technologies

What are the key emerging technologies that are likely to have a significant impact on businesses in 2024 and beyond? Forrester’s report provides insights on how technology executives can invest in technology to drive business growth in 2024. It identifies three primary areas of investment:

• Application and software — new products and services, customer relationship systems (CRMs), data analytics, and marketing capabilities.
• Infrastructure modernization — network, data center, and end-user hardware infrastructure.
• Management spend — IT services, staffing, and personnel.

Allocate enough resources to security

Cybersecurity should be a top priority for all businesses, regardless of size or industry. Make sure that you are allocating enough resources to protect your data and systems from cyberattacks.

Modernize & embrace the cloud

The cloud offers a number of benefits for businesses of all sizes, including scalability, flexibility, and cost savings. As you’re developing your budget for 2024, consider how you can migrate more of your workloads to the cloud. This can help reduce infrastructure costs and free your team to focus on more strategic initiatives.

Infrastructure modernization reduces costs and opens new business growth and expansion opportunities. Investing in modernizing your infrastructure is essential for future business growth.

In a survey of 56 cloud technology decision-makers, Forrester found that in the next 12 months, 77 percent of respondents plan to increase the budget for their public cloud and 64 percent for their internal private cloud (as of August 2023), making the cloud an important aspect in a majority of surveyed decision-makers.

Monitor your spending and optimize your costs

Several cloud-based budgeting tools are available that can help you track your spending and manage your costs more effectively. These tools can provide you with real-time insights into your cloud spending, as well as help you identify areas where you can save money.

Read also: Cloud sprawl: How to manage and prevent uncontrolled cloud growth

Revolgy can help you keep track of your IT spending. We offer FinOps services, cost review, and optimization to ensure you’re not spending too much on running your cloud environment. Do you want to know more? Get in touch for a free consultation.

Best practices for 2024 tech budgeting

Once you have considered the key areas that will impact your spending, you can start to apply best practices to your budgeting process. These practices will help you to prioritize your investments, communicate your budget effectively, invest in your team, and build a flexible budget that can adapt to changing needs.

Prioritize your technology investments

Not all technology investments are created equal. Some will be more important to your business than others. It’s important to prioritize your investments and focus on the ones that will impact your business goals most.

When making investment decisions, consider the following factors:

• The potential return on investment (ROI)
• The alignment of the investment with the company’s business strategy
• The risk associated with the investment

Communicate your budget to your team

Get input from your team. Your team members are the ones who are using your technology on a daily basis. They can provide valuable insights into where the biggest gaps are and what investments would be most beneficial.

Once you have a final budget in place, communicate it to your team and explain the rationale behind your decisions. This will help ensure everyone is on the same page and that your team is aligned with your goals.

Invest in talent & your team

Your team is your most important asset. Make sure that you’re investing in their skills and development so that they can stay ahead of the curve. This may include providing training opportunities, sending them to conferences, or encouraging them to take on new challenges.

Be realistic & build a flexible budget

Traditional budgeting models can be inflexible and outdated. Instead, consider adopting an agile budgeting approach that allows you to adapt to changing technology needs and market conditions. This may involve setting aside a contingency fund for unexpected expenses or using cloud-based budgeting tools to track your spending in real-time.

To wrap up

Creating a tech budget for 2024 requires careful planning and consideration of your business goals, the current technology landscape, and the impact of new technologies. Following the key areas for consideration and best practices outlined in this article, you can develop a budget to help you achieve your goals and support your company’s growth.