Most budgets start from last year’s number. The ones that hold up through June start from five questions.
Most organizations set next year’s technology budget sometime between October and December. And most of those budgets start the same way: last year’s number, adjusted up or down a few points, with new requests added until someone says stop.
That approach is fast, and it is defensible in a meeting. It also tends to fund what already exists rather than what the organization actually needs next year. The result shows up around the second quarter, when a renewal comes in higher than expected, an audit finding needs money nobody set aside, or a project is approved but there is nobody available to deliver it.
A budget that holds up through the year usually answers five questions before it is final.
Five questions to answer first
1. What are we already committed to?
Start with the money that is spoken for before any new decision is made. Contracts that renew during the year, licenses with scheduled price increases, support agreements, subscriptions that grow with headcount or usage, and systems reaching the end of vendor support.
For most organizations this is the largest part of the budget, and it is the part that gets reviewed least. Pull the actual renewal dates and terms rather than carrying last year’s figure forward. Cloud and software costs in particular have a way of growing quietly between budget cycles.
2. What risks do we already know about?
Every organization has a list of known problems that have not been funded. Open findings from the last security assessment or audit. A recovery plan that has never been tested. A system that everyone agrees needs to be replaced and nobody has scheduled.
These items belong in the budget on purpose, with a line and an amount, rather than waiting to become urgent. In regulated industries this matters twice, because examiners and auditors will ask what was done about last year’s findings, and “it was not in the budget” is not an answer that closes the question.
3. Is the budget split into run, grow, and fix?
A single technology budget line hides the choices inside it. Separating it into three groups makes those choices visible.
- Run. What it costs to keep current systems operating, supported, and secure.
- Grow. New capabilities that support where the business is going.
- Fix. Known risks and technical debt that need to be retired.
Leadership does not need to agree on the exact split. The value is that when money gets tight midyear, the conversation is about which bucket gives way, instead of an across the board cut that quietly removes the fix items first.
4. Does every initiative have an owner and a measure?
A new initiative should not reach the budget without three things written next to it. The business outcome it supports. The person accountable for delivering it. And how anyone will know, at the end of the year, whether it worked.
This sounds like paperwork. In practice it is the fastest way to find the requests that do not have a clear reason behind them, before money is committed rather than after.
5. Do we have the people to deliver it?
This is the question budgets miss most often. Tools and licenses get funded. The time and expertise to implement them does not. The result is software that is paid for and only partly in use, or a project that starts on schedule and stalls by the third month.
For each major initiative, ask who will actually do the work and whether they have the hours. Where the answer is no, the budget needs a line for it, whether that means hiring, contract staff, or an outside partner for a defined piece of work. It is far cheaper to plan for that capacity now than to find it under pressure later.
Leave room to adjust
Even a careful budget will be wrong in places. Hold a modest contingency for the things nobody can predict, and schedule a midyear review where the run, grow, and fix split can be revisited with real numbers. Public sector organizations should also check how their fiscal year lines up with grant cycles and contract renewals, since those dates rarely match the calendar.
The goal is not a perfect forecast. It is a budget that reflects real commitments, funds known risks on purpose, and matches the work to the people who will do it. That is the kind of budget that is still useful in June.
System Custom Consultants helps financial services, healthcare, and public sector organizations plan and deliver technology work, from program management and cybersecurity to the specialized IT staff needed to carry it out. If you are shaping a 2027 plan and want a second view, start a conversation at systemcustom.com.
