Mar 27 2014, 9:46am CDT | by Forbes
By Christine Hall
IT executives say budgets are back, and, combined with continued low financing options, this means 2014 could be the year for companies to dust off those technology project plans.
According to a survey of 900 IT leaders in the United States and Canada by IT services firm TEKsystems, budget optimism is at the highest point since the economic downturn, with 63 percent of respondents saying their budget would increase,
However, not just any IT project will do, said Gary Marshall, CIO of SunGard Availability Services. In fact, he added, the term “IT project” is a misnomer.
“Every project is an ‘enterprise, multi-department project,’” said Marshall.
Questions to ask before financing
The IT department typically isn’t a revenue-generator, but it can (and should) be considered a productivity-booster.
When considering an IT project, four areas of value must be considered:
Marshall said if the cost of executing on those four areas exceeds the value of the project, then don’t do it.
Financing IT projects strategically
“We are definitely seeing more companies entertaining leasing [IT equipment], even on deals that are $100,000 or $50,000, where leasing wasn’t previously entertained,” said Kevin Baranowski, director of sales for New York-based Align Communications Inc., a provider of technology infrastructure solutions. “Now, we are even seeing leasing being extended or companies are adding on to their leases, billing them as operational expenses rather than capital expenditures.”
Right now, the cost of financing is relatively low, and it is expected that costs will hold steady through most of 2014, However, companies must also keep their eye on interest rates, which will likely rise as the economy continues to improve.
Still, any challenges companies face along these lines are in the “good problem to have” category. Companies that have been in heads-down, doing-more-with less mode are starting to see their budgets opening up. Indeed, Baranowski expects large-scale projects that have been on hold to come online early this year.
For companies that decide leasing is not an option, there are other financing strategies available for companies to consider.
Debt financing, for example, can open up new opportunities for companies. This can come in the form of a line of credit from the bank or, depending on the size of the company, angel investment or venture capitalist funding. Another option involves a lender providing working capital by purchasing the accounts receivable from a company.
With a variety of financing options and a strategic approach to project selection, funding for your company’s next IT venture is easily within reach this year.
Christine Hall is a freelance journalist specializing in banking and finance, public companies and technology. She was a staff writer for nine years at the Houston Business Journal, most recently as banking, finance, and technology reporter.
Source: Forbes Business/>/>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.
blog comments powered by Disqus