Creating a Network Budget Strategy

When annual network budget seasons start, the proverbial wisdom is that you assess all of the projects you’ll be doing for the coming year, revisit current fixed budget categories to see how they performed and what you think you’ll need to sustain them, determine whether you need to add headcount, and then set your numbers a little above what you really need in the event that something comes along later that you didn’t expect.

The reason for setting the network budget at a slightly higher level than what you need is that you want to avoid going back to the CIO or CFO to ask for extra funding.

This seems simple enough, but there are all kinds of reasons why you could be surprised by unanticipated costs that you didn’t account for. Here are several:

For these and other reasons, you need a budget strategy that is able to scale with new IT needs as they present themselves.

How do you do this?

Tips to implementing an improved network budget strategy

#1 Get the network staff on project planning teams

There is a myriad of IT-related projects that get planned at least one year in advance of execution.

It could be that a specific enterprise software package is going to be replaced or updated, or perhaps a new e-commerce site or application will be developed and deployed. There might even be a business strategy that involves acquiring or merging with another company that will require greater networking and communications.

Each of these projects, although initially defined and planned by applications or even by C-level management, will require network resources that are not part of normal network budget planning. The network group needs to know about them before annual budgeting so that these costs can be baked into the budget.

If doing this sounds like a "no-brainer," it isn't. Too often, the applications group plans or gets notified about new projects, but other IT areas, like networking, get left out of the communication. This later impacts budgets and creates budget exceptions because no one in networking had an early “heads-up” that would have alerted them to the need to budget.

#2 Insert yourself into user planning and edge computing

A similar situation of poor advance budget visibility for networking comes about in user IT projects.

In 2023, Gartner predicted that user citizen developers would outnumber professional IT developers by a ratio of four to one.

User departments with citizen developers now have their own IT and network budgets. They subscribe and enter into IT contracts with their own cloud providers, and they develop their own applications. IT might not know about any of this activity in advance, and the IT network group certainly won't, either. From a budget perspective, this is another area where the network group gets caught unawares because a budget allocation for a user area that requires additional network resources isn’t in the network budget.

One way to address this situation is to insist that the network group be part of user-IT planning sessions. The CFO and even user department managers are likely to support this—because no one likes to be unpleasantly surprised by budget overruns, which could have been avoided.

#3 Consolidate network tools

There are enterprise network groups that use as many as 25 different software tools to manage and administer their networks. Some of these tools are proprietary, some are vendor-agnostic, and still others are developed internally by IT itself.

Needless to say, there is functional overlap between these tools.

The network group should take a look at these tools, determine where the functional overlaps are, and eliminate tools (and their costs) that are redundant and/or obsolete.

This helps the budget.

#4 Assess the impact of cloud computing on network costs

In a 2022 Harvard Business Review survey, 77% of survey respondents said that their organizations needed to improve cloud management.

A major challenge that the cloud presents on the cost side is that every cloud service is billed differently. Some cloud bill line items are charged based on the amount of storage or processing used, while other line items are billed based on the number of transactions processed. In still other cases, such as securing cloud support, outsourcing functions like network management to the cloud, or subscribing to cloud training or consulting, costs may be billed on a monthly or on a one-time basis. When the total cloud bill comes in, all of these costs are mashed together. This makes it difficult to sort through them so you can determine where you are over-spending or over-provisioning in the cloud.

On the flip side, cloud cost benefits can also be overlooked.

If, for example, you choose to use the cloud as a “virtual” network and portal for user access to your applications and data, you could actually be eliminating or delaying the need to invest and incur costs in your internal network resources. You might be able to reduce the number of VPNs (virtual private networks) that your company uses and pays for and even diminish the expense of costly MPLS (multi-protocol label switching) lines.

Final remarks about developing a network budget strategy

Cost management is an integral element of network management that can easily get lost in the daily shuffle of meeting new network services requests and ensuring that corporate networks remain safe and operational. Nevertheless, network groups should monitor resource usage and cost optimization as well as network performance. The end goal should be to ensure an optimized network for both performance and cost.

In this way, enterprise network groups move toward a 360-degree handle on all aspects of network management.

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