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Fundamentals for Building a Tech Budget in Uncertain Times

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While the pandemic may have blown up your budgeting process, uncertainty doesn’t have to leave you unable to move forward. These budgeting principles can help your association take its best stab at allocating funds for future tech needs.

Technology moves fast, evolving so quickly that what was cutting-edge a year or two ago can feel obsolete today. For associations, this presents challenges when trying to budget for technology. A good solution is to take a holistic approach that separates capital and operating expenses, while leaving wiggle room if unexpected needs arise.

The first principle that will help associations do a better job of budgeting, even as times change, is to know what you have, says Christopher Finnegan, senior director of technology solutions at Association Headquarters.

“I think one of the biggest things to do upfront is just ensuring what IT is in your organization,” he said. “I know that sounds funny, but sometimes, especially with these SAAS [software as a service] products and a lot of work going online, it is really important to understand what you have.”

Capital vs. Operating Expenses

Once you have a clear picture of the technology you’re currently using, you can start with some key budgeting principles. Finnegan suggests separating capital and operating expenses.

“With operating expenditures, you can move pretty quick,” Finnegan said. “You are getting those services from other places. There are lower upfront costs. Capital expenditures are the bigger ones—you have to buy maybe these big servers, these large pieces of equipment, these large systems that depreciate over time.”

Distinguishing these two expense categories will give you room to figure out your association’s immediate budget needs and those that will come over time. And because almost every operational area in an association uses technology, it’s also important to think through how the budget for tech is distributed throughout the organization.

“Does this fall into our overall technology, or is it a piece of software for marketing?” Finnegan said. This helps determine where the expense should be allocated in your budget.

When it comes to big expenses, such as buying laptops for all staff, Monica Dillingham, chief technology officer at the National Association of College and University Business Officers (NACUBO), said organizations can sometimes spread out their costs to avoid taking a big hit at once.

“For equipment, we used to refresh everyone in one fiscal year,” Dillingham said. “Now we have a rolling roll out, so that I can spread it over three years.”

“I think one of the biggest things to do upfront is just ensuring what IT is in your organization.” — Christopher Finnegan, Association Headquarters

Savings vs. Flexibility

For many SAAS purchases, associations can save significant dollars if they commit to multi-year deals. While savings are important, Finnegan urges caution.

“A lot of times what is beneficial is the crawl, walk, run model,” Finnegan said. “In the beginning, especially if it’s a brand new software, brand new application, or brand new initiative, you’re going to pay more for a month-to-month, but you want to get the month-to-month to make sure it’s working correctly. You pay a little bit more for that, but you’re paying for the flexibility.”

For example, an association may be planning to adopt a voice over internet protocol phone system. While it may test well with a few staff, once it’s rolled out to the entire organization, the system may not perform as well. However, most employees aren’t going to report a single dropped call.

“People live with it,” Finnegan said. “You don’t hear the feedback until it’s gotten to a breaking point. It could be five months and, all of a sudden, you hear from several people, ‘This isn’t working.’ Everybody thinks it’s a mess.”

Using the crawl, walk, run model, associations can be sure they’ve got a keeper before they lock into something that doesn’t work, which then causes more expense to get out of the contract.

Leave Wiggle Room

Both Finnegan and Dillingham recommend giving yourself a little extra in the budget.

“When budgeting, keep in mind that when you’re looking at these numbers, you’re guessing,” Finnegan said. “Always lean on the heavier side in terms of the budget because if you lean on the heavier side, and you don’t spend that much, that’s just money you saved and you can potentially reallocate it.”

The bit of padding Dillingham had in her budget came in handy when the pandemic hit and the entire staff went remote. “Luckily, we had already purchased laptops,” she said. “However, there were other services that we were going to have to provide now that people were working from home. One thing that wasn’t in our budget was implementing multifactor authentication.”

She also advises budgeting for known possible problems. While NACUBO staggers laptop purchases, Dillingham includes funds to replace one or two machines that might die. “You do have to make sure you have backups,” she said.

Dillingham says timing can help resolve budgeting issues, too.

“If your fiscal year ends May 31 and it’s April, maybe you can push some things off and you’ll get new funding in the new fiscal year,” she said. “So, strategically lay out your projects so that you’re cognizant of the funding that you will have available.”

Rasheeda Childress

Rasheeda Childress is a former editor at Associations Now.

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