IT Department Costs
When evaluating software, a business must consider cost, effectiveness, and how it will be maintained. When vetting a vendor, a business should consider multiple aspects such as how long they have been in business, their customer base, how they will communicate, and how they will handle emergencies and security. The global IT budget for 2019 is predicted to be $3.85 billion.
When vetting potential software vendors, a business should ask themselves the following questions:
- How long have you been in business?
- Who have you worked with in the past? Get a list of references with possible.
- Who is on your team? This will help you get an idea of their skillset and experience.
- How often will we communicate? How will we communicate? Make sure that after you sign the contract they will not disappear.
- How do you approach IT? Are they proactive? Will they be actively reviewing your account for issues?
- What is the process for implementation? Is there a timeline? What will happen first?
- What do we do if there is an emergency? How fast can they respond? How do they bill for emergencies?
- How can you help us plan for the future? Is your company on top of industry trends? What are they doing to keep up with ever-changing technology?
- How do they charge?
- If there are issues, what is the process to resolve them? If a potential company has no processes in place to deal with issues, you should be concerned.
Due Diligence For Security When Vetting
- Make sure your potential vendor has an information security policy in place. There should be "technical, physical, and administrative safeguards in place".
- If a data breach should occur on their side your information should be protected. Is your information encrypted? Who will have access to your information?
- Security updates should be performed regularly with systems in place to make sure it is done effectively.
- Firewalls must meet industry standards as required by law.
- Your vendor should have SSAE 16, or SOC 1 and 2 certifications show that your vendor has the controls in place to protect your information in regard to privacy and confidentiality.
- Make sure their physical security policies are in place and are followed.
- The Validation Center has a checklist for vetting.
- When evaluating software, one should be objective and subjective between what the user needs and what they want their user experience to be.
- Sustainability, usability, and maintainability should be considered.
- An ideal time frame to evaluate software is one to two weeks of use.
- Cost should be considered. Are there upfront costs or subscription costs?
- A software decision should be easy to use for all users. Software that requires little training is the easiest to implement.
- Consider the overall strength of a software solution. Just because one area is a strength and everyone prefers it does not mean it is the best choice.
- Your organizational structure should be considered. Who can maintain the program? Who is responsible for what parts of the software?
- Include all stakeholders in the selection process. An end-user may have a totally different opinion than the IT department
Questions To Consider When Evaluating Software:
- What is the objective for this software? What problems do we need it to solve?
- What critical processes do we need to address?
- Is the program functional? Does it meet our needs?
- Is this program affordable? Does it fit our budget? Are there extra fees associated such as licensing? Know exactly what you will be paying.
- Will this vendor be around in ten years? If not, how will we support this new technology purchase?
- What strains will this new software put on our IT department?
- If this does not work out, do we have an exit strategy?
- The worldwide IT budget in 2019 is estimated to be $3.85 billion, up 6% from 2017 and 2.8% from 2018.
- In 2019, it is estimated that $424 billion will be spent on Enterprise software.
- The biggest spend in IT budgets is communication services at $1.47 billion.
- Shadow IT is set to overtake normal IT budgets in terms of spending in 2019. It is predicted to grow at a CAGR of 6.9% until 2021.
- Medium-size businesses (100-499 employees) spent $229 billion on IT in 2018.
- Small businesses (less than 100 employees) IT budgets are set to grow at 4.7% from 2017-2023.
- Budgets vary by industry. For example, the financial industry has a budget that ranges from 4.4% at the 25th percentile and 11.4% of their revenue at the 75th percentile. The lowest IT budgets come from the discrete manufacturing industry at 1.4% at the 24th percentile to 3.2% at the 75th percentile.
- Cloud computing is included in the budgets of 47.8% of businesses. Companies with revenue between $5 and $100 million include cloud computing 50% of the time, while only 33.4% of businesses with revenue under $5 million do.