Your First IT Budget: A Survival Guide for New Managers
Welcome to Budget Season (AKA: Nobody Told Me I'd Need to Do This)
It's September. You've been a manager for a few months. You're starting to feel like maybe you've got this whole management thing figured out.
Then your boss sends you an email: "Need your FY2025 budget proposal by end of the month. Use last year's numbers as a starting point, but adjust for your initiatives. Let me know if you have questions."
You stare at this email. You have so many questions. You don't even know what questions to ask.
Welcome to IT budgeting.
Nobody trained you for this. Your network engineering certifications didn't cover "how to justify a firewall refresh to the CFO." (Cisco is just a 5-letter word to them, am I right?!?) Your years as an engineer didn't prepare you for translating technical needs into financial spreadsheets that leadership actually approves.
And yet, here you are. Expected to produce a budget. For an entire year. For infrastructure, people, and projects you may not yet be aware of.
Let me help. I just went through this for the first time. I made mistakes. I learned things. Here's what I wish someone had told me before I started.
What Nobody Tells You About IT Budgets
Before we get into the mechanics, let's talk about what budgeting actually is - because it's not what you think.
It's Not Really About the Money
What You Think Budgeting Is: "I'll calculate what we need, request that amount, and get it because the needs are obvious."
What Budgeting Actually Is: "I'll request what we need, get 60% of it, and then spend the next year negotiating for exceptions while defending every line item."
The Reality:
Budgeting is a political process disguised as a financial one. You're not just calculating costs - you're:
Prioritizing among competing needs
Justifying technical decisions to non-technical people
Negotiating with finance, procurement, and leadership
Making trade-offs you don't want to make
Setting expectations for what you can deliver next year
Your Budget Is Your Credibility
Here's what I learned the hard way:
If you request $500K and can only explain $300K of it convincingly, you'll get $300K. Maybe less.
If you request $300K and can justify every dollar with business impact, you might actually get $300K. Maybe even a bit more.
Your budget proposal is a test:
Do you understand your infrastructure needs?
Can you translate technical requirements into business value?
Are you realistic or aspirational?
Can you be trusted with money?
Leadership is evaluating whether you know what you're doing. Your budget document is evidence one way or the other.
Budget Cycles Are Weird
What I Didn't Understand:
You're creating a budget in Q3/Q4 for the following calendar year. But you're making decisions based on:
Current needs (which will change)
Predicted needs (which are guesses)
Projects you haven't fully scoped yet
Technology that might not exist yet
Team members you haven't hired yet
And then:
Once approved, that budget is semi-locked for the entire year. Need more money mid-year? Good luck getting budget exceptions.
Need less? Great, but they might cut your budget next year because "you didn't use it all."
The Lesson:
You're not creating a precise financial plan. You're creating a negotiating document that sets boundaries for what you can do next year.
Understanding organizational constraints and working within them is something I explored in managing up as a technical manager - budgeting is ultimately about advocating for resources while respecting business realities.
The Budget Categories Nobody Warned You About
Let's get practical. Here are the budget categories you actually need to account for:
1. Hardware (The Obvious One You'll Still Underestimate)
What Goes Here:
Network equipment (switches, routers, firewalls, wireless APs)
Servers (physical or virtual host hardware)
Storage arrays
Cables, transceivers, and "minor" equipment that adds up fast
Rack equipment (PDUs, cable management, etc.)
Replacement equipment for aging infrastructure
Spare equipment (yes, you need spares)
What I Forgot:
Shipping costs. That $30K switch becomes $31.5K after shipping, handling, and customs if it's international.
Tax. Depending on your location and vendor, add 6-10% sales tax to everything.
Installation hardware. You bought the switches but forgot the rack mount kits, power cables, and SFP modules.
The "oh crap" buffer. Equipment prices increase. Specs change. You discover you need more than you thought. Build in 10-15% buffer.
Pro Tip:
Get actual quotes from vendors, don't just estimate from website pricing. Enterprise pricing is often different from list price, and you want real numbers for your budget.
2. Software and Licensing (The Category That Never Stops Growing)
What Goes Here:
Network management platforms
Monitoring and alerting tools
Security software (antivirus, EDR, SIEM)
Backup and disaster recovery software
Virtualization licensing
Operating system licenses
Application licenses
SaaS subscriptions
The Trap:
Most software isn't one-time cost - it's annual recurring expense. That $10K monitoring platform becomes $10K every single year, often with 3-7% annual increases.
What I Forgot:
Renewal increases. That vendor quote for "year one" pricing? Year two is usually 20-30% higher. Ask about multi-year pricing upfront.
License true-ups. You licensed for 100 devices. You're now at 130. Compliance audits happen and you'll owe back-licensing fees plus penalties.
Training licenses. Some software requires training before you can use it effectively. That's a separate cost.
Support and maintenance. The license is $5K. The annual support contract that you actually need is another $2K per year.
Pro Tip:
Track all your software renewals in a spreadsheet with renewal dates. Nothing worse than discovering mid-year that you forgot about a $15K annual license renewal.
3. Maintenance Contracts and Support (The "Insurance" You Actually Need)
What Goes Here:
Vendor support contracts (Cisco SmartNet, Dell ProSupport, etc.)
Hardware warranty extensions
On-site support agreements
Spare parts programs
Software support and updates
The Question You'll Get:
"Do we really need support contracts? Can't we just fix things ourselves or buy replacement parts?"
The Answer:
For critical infrastructure, yes you need support. Here's why:
4-hour hardware replacement beats 3-day shipping of parts you have to source
Vendor technical support for complex issues you can't solve internally
Software updates and security patches
Access to RMA process for failed equipment
Peace of mind that critical infrastructure has safety net
What I Learned:
Budget for support on everything critical. You can skip it on non-critical infrastructure, but one major failure will cost more than years of support contracts.
4. Professional Services and Consulting (When You Need Help)
What Goes Here:
Implementation services for complex projects
Network design consulting
Security assessments and penetration testing
Performance optimization consulting
Project management for major initiatives
Temporary contractor help during peaks
When You Need This:
Your team doesn't have expertise for everything. Sometimes hiring experts for specific projects is smarter than learning through expensive mistakes.
What I Forgot:
Professional services are expensive. That network redesign? Could be $50-150K in consulting fees before you even buy equipment.
Budget for this upfront. Don't discover mid-project that you need consulting help you can't afford.
5. Training and Certifications (The Category Everyone Cuts First)
What Goes Here:
Technical training courses
Certification exam fees
Conference attendance
Online learning platform subscriptions
Books and study materials
Travel for training (if not remote)
Why This Gets Cut:
Training feels optional. The network runs without certifications, right?
Why You Shouldn't Cut It:
Your team's skills degrade if not maintained
New technologies require new knowledge
Certifications help with recruiting and retention
Training prevents expensive mistakes from a lack of knowledge
It's a signal that you invest in people
What I Budgeted:
$2-3K per team member annually for training/certifications. Not lavish, but enough to maintain skills and pursue one major certification or conference per year.
Investing in team development isn't optional if you want to retain good people, something I explored in preventing burnout - professional development is part of sustainable work environments.
6. Cloud and Hosting Costs (The Category That Surprises You)
What Goes Here:
Cloud infrastructure (AWS, Azure, GCP)
SaaS applications
Hosted services
CDN and bandwidth costs
Backup storage (cloud)
Disaster recovery hosting
The Challenge:
Cloud costs are variable and can spike unexpectedly. You budget $5K/month, and suddenly you're at $8K because usage increased.
What I'm Learning:
Build in a 20-30% buffer for cloud costs. Usage always grows. And if you're migrating to the cloud, budget generously for the transition year - you'll be paying for both on-prem and cloud during migration.
7. Network Connectivity (The Recurring Costs You Can't Skip)
What Goes Here:
Internet circuits (primary and backup)
WAN links between sites
MPLS or SD-WAN costs
VPN services
Cellular backup connections
Bandwidth upgrades
The Trap:
These are usually annual contracts that auto-renew with price increases. You can't just "not budget" for them - you have these costs whether you like them or not.
Pro Tip:
Review all your connectivity contracts before budgeting. Are you paying for circuits you don't need anymore? Can you negotiate better rates? This isn't new spending - it's managing existing spending better.
8. Projects and Initiatives (The "New Stuff" Category)
What Goes Here:
Major infrastructure upgrades
New technology implementations
Network expansion for business growth
Security improvements
Automation initiatives
How to Budget This:
Break each project into:
Hardware costs
Software costs
Professional services
Internal labor (your team's time)
Training required
Ongoing operational costs
What I Learned:
Projects always cost more than the initial estimate. Add 15-20% contingency to every project budget.
9. The "Stuff You Forgot" Category (Create This, Trust Me)
What Goes Here:
Small equipment purchases that come up mid-year
Emergency replacements
Unplanned expenses
"We didn't know we needed this until we needed it."
How Much:
Budget 5-10% of your total budget as contingency. You'll use it. I promise.
What Leadership Will Say:
"Why do you need a contingency? Just budget for what you actually need."
What You Say:
"IT infrastructure has unpredictable failures and requirements. This contingency prevents me from coming back for budget exceptions every month when reality doesn't match January's predictions."
How to Actually Build Your Budget (Step by Step)
Okay, you know what categories exist. Now how do you actually create the budget document?
Step 1: Understand What You Currently Spend
Start Here:
Get last year's budget and actual spending. Don't start from scratch - understand your baseline.
Questions to Answer:
What did we budget last year?
What did we actually spend?
Where did we over/underspend?
What expenses were one-time vs. recurring?
What got cut or deferred?
Why This Matters:
If you ask for 40% more than last year without clear justification, you'll get pushback. Understanding the baseline helps you explain increases.
Step 2: Inventory Your Recurring Costs
Make a List:
Every single recurring expense you have:
Software licenses and their renewal dates
Hardware support contracts
Network connectivity costs
Cloud/hosting subscriptions
Any other "automatic" annual expenses
This is Your Floor:
These costs don't go away. This is your minimum budget before you add anything new.
Pro Tip:
Put this in a spreadsheet with renewal months. This becomes your planning tool for the year.
Step 3: Identify Equipment That's Aging Out
The Exercise:
Walk through your infrastructure and identify:
Equipment that's end-of-life or end-of-support
Equipment that's aging and likely to fail
Equipment that's under-capacity for current needs
Equipment that should be replaced for security/performance
Be Realistic:
You probably can't replace everything. Prioritize by business criticality and risk.
The Business Case:
For each replacement, document:
What you're replacing and why
Business risk of not replacing (security, reliability, performance)
Cost to replace
Benefits of replacement
Step 4: List Your Planned Projects and Initiatives
What's Coming:
Based on your understanding of business needs:
Infrastructure projects required for business growth
Security improvements needed
Technology upgrades planned
Automation initiatives
Anything leadership has mentioned wanting
For Each Project:
Estimate costs across all categories (hardware, software, services, training, ongoing costs).
Be Honest:
Don't pad estimates to get more budget. But don't lowball either - realistic estimates build credibility.
Step 5: Account for Growth
The Question:
Is the business growing? New locations? More users? More applications?
The Budget Implication:
Growth requires infrastructure investment. Budget for:
Additional capacity
New site equipment
Increased licensing
More bandwidth
Potentially more staff
The Conversation:
If business is planning 20% growth but giving you 0% budget increase, that's a problem worth discussing.
Step 6: Add Your Contingency
Don't Forget:
Add 5-10% contingency for the unpredictable stuff. You'll need it.
Step 7: Build the Narrative
Here's the Secret:
Your budget isn't just numbers in spreadsheet cells. It's a story about:
What you're maintaining
What you're improving
What you're enabling for the business
What risks you're mitigating
The Document Should Include:
Executive summary (one page: total request, major items, business justification)
Detailed breakdown by category
Project descriptions and justifications
Multi-year view (this year's request plus next 2-3 years outlook)
Alternatives if you don't get full funding
Why the Narrative Matters:
Finance people see hundreds of budget requests. The ones that tell a clear story about business value get approved. The ones that are just lists of technology purchases get questioned.
Building business cases for technical spending is a skill that applies beyond budgeting, something I explored in making the business case for network modernization - you're always translating technical needs into business language.
The Political Realities of Budget Approval
Let's talk about what actually happens after you submit your budget.
You're Competing with Everyone
The Reality:
IT wants money. So does Sales. Marketing. Operations. HR. Facilities. Everyone.
The total requests exceed available budget. Something gets cut.
Your Job:
Make your request so well-justified that it's harder to cut than someone else's.
Finance Will Question Everything
Expect Questions Like:
"Why do you need this?" "Can't we defer this another year?" "What if we cut this by 20%?" "Can you make do with less?" "Why is this so expensive?" "Can we get cheaper options?"
Don't Get Defensive:
This is their job. Answer calmly with business justification. If you can't defend a line item, you probably shouldn't have included it.
Your Boss Is Your Advocate
Remember:
Your budget request goes to your boss, who consolidates it with other requests, and advocates to their leadership.
Your Boss Needs:
Clear justification they can defend upward
Business impact language, not technical jargon
Realistic requests that won't make them look bad
Understanding of trade-offs if cuts are required
Help Them Help You:
Give them the ammunition to fight for your budget. Anticipate questions and provide answers upfront.
You Probably Won't Get Everything
The Likely Outcome:
You'll get 60-80% of what you requested. Maybe less.
Be Prepared:
Know what you can cut, what you can defer, and what's absolutely critical. You'll have that conversation.
The Question You'll Get:
"If I can only give you $X instead of $Y, what would you prioritize?"
Have an Answer Ready:
Don't just say "everything is critical." Provide actual prioritization.
Mid-Year Budget Adjustments Are Hard
What I Learned:
Once budget is approved, getting more money mid-year requires going through approval process again. This is painful and often unsuccessful.
The Implication:
Be thorough upfront. Finding money you forgot about is way harder than explaining why you need it during budget season.
The Exception:
Emergency spending for security incidents, critical failures, or urgent business needs usually has a process. Ask what that process is before you need it.
Common First-Timer Mistakes (That I Made)
Let me save you from my mistakes:
Mistake 1: Forgetting Annual Renewals
I budgeted for new stuff but forgot that $30K in software renewals happens every May. Suddenly my budget was blown in month five.
The Fix:
Create a calendar of all recurring expenses with their renewal dates. Budget for all of them.
Mistake 2: Not Including Tax and Shipping
My hardware budget was great - for the list price. I forgot about 8% sales tax and shipping. My $50K hardware budget became $55K actual.
The Fix:
Add 10-15% to hardware estimates for tax, shipping, and incidentals.
Mistake 3: Underestimating Project Costs
That network refresh I estimated at $75K? After professional services, training, cabling, configuration time, and unexpected issues, it was $95K.
The Fix:
Add 20% contingency to project estimates. Projects always cost more than you think.
Mistake 4: Assuming Current Vendors Are Cheapest
I used current vendor pricing for everything. Turns out competitors could beat those prices by 20-30% for some items.
The Fix:
Get competitive quotes during budget planning. You might find money you didn't know you had.
Mistake 5: Not Considering Lifecycle Timing
I budgeted to replace 50 access switches. I didn't think about the fact that this would consume my entire team for a month during our busiest time.
The Fix:
Think about implementation timing and team capacity, not just budget dollars.
Mistake 6: Being Too Conservative
I was afraid to ask for what we actually needed. I submitted a "safe" budget that got approved but left us under-resourced all year.
The Fix:
Ask for what you need with solid justification. Getting cut to 70% of a realistic budget is better than getting 100% of an inadequate one.
Mistake 7: Not Tracking Spending Throughout the Year
By Q3, I had no idea where I stood budget-wise. Was I over? Under? No clue.
The Fix:
Monthly budget review. Track actual vs. planned spending. Adjust forecasts as needed.
The Bottom Line: Your Budget Is Your Constraints
Here's what I wish someone had told me upfront:
Your budget defines what you can accomplish next year.
Too conservative: You'll be under-resourced and explaining all year why you can't deliver what the business needs.
Too aggressive: You'll get cut back, look unrealistic, and damage credibility.
Just right: You get resources to maintain operations, make strategic improvements, and have a buffer for unexpected needs.
Budgeting is a skill you'll get better at.
Your first budget will be imperfect. That's okay. You'll learn what you forgot, what you overestimated, and what you underestimated.
Next year's budget will be better because you'll have data from this year.
Your budget is a negotiation, not a demand.
Go in with solid justification, realistic numbers, and a willingness to discuss trade-offs. Be firm on what's critical and flexible on what's not.
Nobody expects you to be perfect at this immediately.
Ask questions. Admit what you don't know. Get help from your boss, peers, and finance. Everyone was a first-time budget creator once.
Take it seriously but don't stress.
Yes, budgeting is important. But one imperfect budget doesn't destroy your career. Do your best, learn from mistakes, and improve next time.
You've got this. It's just another skill to learn, like everything else in this management journey.