IT policy and strategy

BUDGET TOOL

Gray cells contain calculations that should not be altered.
[Company Name]
Technology Budgeting Tool
[Date]
Company Data
Required rate of return	10%
Tax rate	30%
Initial Investment	YEAR	1	2	3
Hardware costs (e.g., servers, networking hardware, PC upgrades)	$1,000
Purchased software costs / licenses (e.g., e-commerce, ERP, CRM software)	$0
Development costs (e.g., systems design and configuration / development)	$0
Training costs (e.g., develop and conduct initial training)	$0
Conversion costs (e.g., initial data conversion from existing systems being replaced)	$0
[Other initial investments]	$0
[Other initial investments]	$0
Total Initial Investments	$1,000
Benefits from Technology Strategy	YEAR	1	2	3
Increased sales and revenue		$1,000	$1,000	$1,000
Reduced personnel costs		$0	$0	$0
Reduced product costs		$0	$0	$0
Reduced distribution costs		$0	$0	$0
Reduced advertising and marketing costs		$0	$0	$0
[Other benefits]		$0	$0	$0
[Other benefits]		$0	$0	$0
[Other benefits]		$0	$0	$0
Total Benefits		$1,000	$1,000	$1,000
Costs (Excluding Initial Capital Investments)	YEAR	1	2	3
Depreciation on capital expenditures (calculation uses three-year period)		$333	$333	$333
Software licensing fees		$0	$0	$0
Ongoing user support and training (e.g., help desk and training personnel)		$0	$0	$0
Ongoing systems support (e.g., IT maintenance)		$0	$0	$0
Hosting / Cloud computing		$0	$0	$0
General and administrative		$0	$0	$0
[Other costs]		$0	$0	$0
[Other costs]		$0	$0	$0
[Other costs]		$0	$0	$0
Total Costs		$333	$333	$333
Totals	YEAR	1	2	3
Net Benefits (Costs)		$667	$667	$667
Tax		$200	$200	$200
Value after tax		$467	$467	$467
Depreciation added back		$333	$333	$333
Cash flow	($1,000)	$800	$800	$800
Cumulative cash flow	($1,000)	($200)	$600	$1,400
Evaluation Metrics
Net present value (NPV)	$989
Internal rate of return (IRR)	60.74%
Payback period (in years)	1.25
Three-year total ROI: (total benefits before taxes - total costs)/total costs	200.00%