Technology Decision Makers

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A group for those in nonprofit IT decision-making roles to connect with peers and share best practices. This Technology Decision Makers group is for nonprofit IT or MIS Directors/Managers as well as CIOs and CTOs to connect with their peers and share best practices. Topics for discussion include, but are not limited to: hardware and software management, product reviews, emerging technology, best practices, collaborating effectively with other departments, and management conundrums. Membership is restricted to IT staff at nonprofit organizations.

Granularity of IT Budget Line Items?

  • 1.  Granularity of IT Budget Line Items?

    Posted May 23, 2018 18:25
    Hello, in addition to managing data at my org I have recently started managing IT, too.

    I'm having a bit of a challenge convincing the head of our external Finance contractor that I want more detailed budget line items for tracking IT assets. I am not an accountant (thank goodness!) but need to know what others here are doing so I can communicate with the accountants.
    Just getting them to understand why IT and Data are NOT the same thing (even though they both traffic in 1s, 0s and mains electricity) and need to be in separate budgets has been a struggle!

    Right now the IT line items we have are:
    - Computer services - includes not only service but purchases of servers, laptops, desktops, etc.
    - Consultants
    - Licenses
    - Small equipment/furniture - where I've been told anything under $5K goes

    It would be useful to at least break out things like Infrastructure Hardware vs. Workstations, wireless vs. landlines/ISP assets, etc...
    Especially as I seek to reduce costs while improving service and finding the ideal balance between internal/external IT (I just hired a very capable IT Coordinator, and we have a less than stellar MSP).

    This doesn't need to have too much detail, just enough to allow program/department managers to better track their IT expenditures through the FY.

    Thanks!


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    Winston Berger
    IT & Data Systems Manager
    A Better Way, Inc.
    Berkeley, CA
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  • 2.  RE: Granularity of IT Budget Line Items?

    Posted May 24, 2018 10:25
    Hi Winston,

    To be clear are you seeking advice on how to convince Finance of why you need this or are you asking how other people break this down?

    Assuming the latter, here are the ways Finance at my organization breaks down IT expenses. It's been like this for over 10 years.

    • Computer Hardware (assets over $1000)
    • Computer Hardware Accumulated Depreciation (we depreciate user computers over 3 years and servers over 5 years)
    • IT Development and Computer Consulting
    • Telecommunications:Telephone (phone service)
    • Telecommunications:Hosting Fees (cloud services and subscriptions)
    • Telecommunications:Connectivity (internet service)
    • Computer Hardware Software (eg Amazon purchases)
    Furniture and office expenses are all tracked separately.

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    Stephanie Henyard
    Information Technology
    Society for College and University Planning
    www.scup.org
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  • 3.  RE: Granularity of IT Budget Line Items?

    Posted May 24, 2018 10:42
    Hey Winston, you raise a lot of issues here!

    First off, you're absolutely right that there's a big distinction between tech and data. There's also an accounting difference between hardware that gets capitalized and depreciated over time, versus software, services or inexpensive hardware that is expensed in one year. It used to be that individual computers were capitalized, but as they have gone down in price and become part of 3-year replacement cycles, most orgs no longer capitalize most individual computers.

    Finance categorizes expenses on multiple dimensions. You may be tracking every expense as a functional expense (what did we buy?) as well as through a program code (why did we buy it? For which program/purpose?) If you're lucky, your finance department will be using true fund accounting software, so that each 'fund' (usually a program) has its own chart of accounts.

    If you want different departments to be able to track their IT spends, you will need a few things:
    1. The ability to charge a department with an IT expense
    2. The ability to allocate a single charge to multiple departments (ie bill everyone their fair share for shared services/hardware)
    3. Reasonable categorization of expenses to a greater granularity than you have right now

    I'd add that one of the best ways to shift the conversation about data vs IT is to point out that IT/infrastructure costs are indirect expenses, but data costs are more readily classified as direct expenses. This insight usually gets senior leadership on board with the need to differentiate between the two.

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    Isaac Shalev
    http://www.sage70.com
    Stamford CT
    @Sage70
    isaac@sage70.com
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  • 4.  RE: Granularity of IT Budget Line Items?

    Posted May 24, 2018 17:10
    @Stephanie Henyard - Yes, I am both seeking advice on how to convince Finance of why I need this, and also asking how other people break this down. Thanks for your org's categories!

    @Isaac Shalev - Finance does capitalize big-ticket items, and uses true fund accounting software.
    We have 1 & 2 from your list below, thanks.
    1. The ability to charge a department with an IT expense
    2. The ability to allocate a single charge to multiple departments (ie bill everyone their fair share for shared services/hardware)
    3. Reasonable categorization of expenses to a greater granularity than you have right now

    ​​​​​​

    ------------------------------
    Winston Berger
    IT & Data Systems Manager
    A Better Way, Inc.
    Berkeley, CA
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  • 5.  RE: Granularity of IT Budget Line Items?

    Posted May 25, 2018 08:17

    You absolutely have to track this stuff.  Otherwise you have no idea if you're doing a good job or where your money is going.

    So I've used a few different models throughout my career.  One is the relatively easy: there's an IT budget and everything goes in there.  The second is the one I've got now, where there are 20 IT budgets for the 20 programs we offer.

    In both cases, I've always tried to track which department was getting the money.  It makes it much easier to see where your money is going and who is making the most demands on IT.

    For hardware, we track everything in Asset Panda, and track asset tag, serial number, purchase date, and who it was purchased for.

    For squishier things that everyone uses like Internet Access, we usually divide it up by department size and every employee counts as a "share".  Phone service may either be cut up amongst different departments per line, though some businesses also like to track Long Distance charges for each department.

    With a single IT budget, it is easier with hardware.  You can move a laptop or a desktop where it needs to go, whereas if, say, marketing bought a laptop with their funds they become pretty grumpy if you try to give it to someone in finance.



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    Colin Boyle
    IT Director
    Manatee Community Action Agency
    Sarasota, FL
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  • 6.  RE: Granularity of IT Budget Line Items?

    Posted May 30, 2018 10:43
    We break down our budgets as follows:
    - Hardware/software Maintenance and license agreements (this includes both support contracts and all SaaS vendors)
    - Contractors for tech projects
    - hardware
    - software licenses we purchase
    - conference registration fees
    - travel for conferences
    - professional development
    - travel for professional development
    - misc. office expenses and supplies (this includes copying, dues, thumb drives, portable dvd players. etc.

    In addition, we either charge the department requesting the product when it is for an individual, or allocate across the organization (similar to what Colin mentioned) for servers, internet and phone, etc.

    We only capitalize hardware over $5,000 plus some special systems that are software but large budget amounts.

    Hope that helps as well.

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    Richard Wollenberger
    Director, Information Technology & HIPAA Compliance and Security Officer
    Parents as Teachers
    St. Louis MO
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  • 7.  RE: Granularity of IT Budget Line Items?

    Posted May 30, 2018 11:01
    In case it helps, this NTC presentation on IT planning and budgeting includes a spreadsheet template that you can use for categorizing expenditures: http://po.st/18NTCcrashcourse

    My approach to this is that I think that getting granular with certain expenses (ongoing subscriptions, equipment which will need to be replaced, etc) is essential for multi-year planning and budget forecasting. But there are other cases where I have general line item budgets because they provide some flexibility and nobody wants to have to break it down to every little cable or keyboard you'll need to buy. The spreadsheet template denotes those general expense lines by italicizing them.

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    Jason Samuels
    IT Operations Manager
    American Craft Council
    Minneapolis, MN
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  • 8.  RE: Granularity of IT Budget Line Items?

    Posted May 31, 2018 12:26
    Thanks to everyone for your thoughtful replies, this is extremely helpful!

    ------------------------------
    Winston Berger
    IT & Data Systems Manager
    A Better Way, Inc.
    Berkeley, CA
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  • 9.  RE: Granularity of IT Budget Line Items?

    Posted May 31, 2018 14:50

    Very helpful and timely post as my organization's fiscal year starts July 1st and I am going through this process right now.

    Thank you all for sharing your knowledge.

    Robert



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    Robert Mendoza
    Director of Data and Technology
    SACNAS
    Santa Cruz, CA
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