You might feel like budget season is a long way off, but if you feel like your past IT budgets have been lacking, it’s never too early to think about what you might need to include in this year’s IT budget.
What needs to be included, you ask? Well, you’re in the right place! Let’s walk through how much is normally spent, some key items you might normally see included, as well as some expenses that commonly get overlooked.
Before we dive in here, we want to disclose that Innovative is an IT services company, and we do benefit from people spending money on their IT. This article is in no way meant to steer people toward overspending.
We’re here to educate and prepare you for that IT budgeting process, whether you’re a client with us or not. If you read this and you like the value our team brings to the IT budgeting process, that’s great, but it’s not necessarily the goal.
Now, let’s talk about how much you should be budgeting for IT and why that budget might encompass more than you realize.
Industry Standards
A survey done by CIO Magazine found that small to medium-sized businesses spend between four and seven percent of their revenue on their IT budget. Despite this survey being done in 2013 (hard to believe it’s been over a decade since then), these percentages still reflect today’s industry standard of five to seven percent.
This number won’t necessarily be the standard forever, and it won’t be the same for everybody. The industry is constantly evolving, and so is the way we work.
The hybrid workplace is here to stay, which means your IT infrastructure needs to be up to speed. The more we utilize technology in the workplace, the more we might see that percentage climb.
What is Included in an IT Budget?
An IT budget typically includes the following items:
- Hardware
- Software (including purchases, application subscriptions, and licensing)
- Technical support and network administration
- Warranties and maintenance
- Network infrastructure
- Data backup and business continuity solutions
- Cybersecurity (including insurance carrier security requirements)
- Project costs
- Telecommunications and video conferencing
- Printer and copier support and maintenance (this often lives in your office supplies budget – but is increasingly more appropriately categorized with IT)
This list is an overview of some common items and can vary depending on the size and scope of a company’s technology needs and business goals.
Expenses to Remember
Your budget is more than just buying new hardware and paying your MSP. Here are a few things to remember and plan for so you don’t get blindsided.
Inflation
That dreadful thing we hear all too much about. When you hear inflation, your mind might automatically think of groceries or gas prices, but inflation applies to IT too. Price increases are an inevitable part of life no matter what we're buying. It’s important to plan for this when budgeting.
Cybersecurity
Cybersecurity is becoming more important each day. In the past, you may have viewed certain aspects of cybersecurity as being optional luxuries, but in today’s world, the threats are advanced, and security is necessary.
In addition to that, it seems like we’re always seeing more and more requirements for cyber insurance policies. It’s just the world we live in, and it’s not going anywhere.
Warranties
If you’re a regular reader of our blog, you know we love to talk about proactive investments. Put in some money now to save yourself a lot of money and headache later. Warranties are a perfect example of this.
Having your hardware covered by a warranty will help ensure that extra costs don’t come sneaking up on you later. If your computer unexpectedly goes kaput on you, it won’t be very fun to fork over the money for a new one.
Instead, you could pay a portion of that cost for a warranty on the first computer and rest easy knowing it’s covered.
Innovative will actually service your warrantied hardware for free if it was bought through us.
Other Software Expenses
Beyond your new hardware or what you pay your service provider, it’s important to remember the other software expenses you might have. This includes any applications you might pay for and the process for evaluating those applications.
If you have a marketing team that needs access to the full Adobe Creative Cloud, it’s going to be $84.99 per license per year. Let’s say that team has four people on it. We’re talking about almost $340 per year.
While this might not be an earth-shattering number for most businesses, it’s still a nice chunk of change that shouldn’t be going unnoticed. These expenses can add up quickly and can have you scratching your head as to where your funds went.
With any software your business uses, it’s important to have an evaluation process. You need to make sure the tools you’re paying for are a good fit. This may involve some investment on your part to make sure you’re doing your due diligence and making good decisions with software purchases.
Advantages of Partnering with Innovative
Our account managers will use their business and IT knowledge to help you plan things out. Rather than just throwing everything at the wall to sell you a bunch of stuff you may or may not need, we will devise an IT strategy based on your business goals.
By understanding what devices you have, what you use them for and how often you use them, we can build an IT strategy that allows you to achieve your business goals by being as productive as possible. At the end of the day, better productivity equals more money.
Knowing the end of your fiscal year and the outlook of your budget is also important when it comes to your IT spending. This information will allow us to begin to map things out.
Mapping out a plan gives us a good idea of your hardware lifecycle and when software licenses need to be renewed. Communicating, planning and investing will prevent you from getting blindsided by regular IT costs.
Next Steps
Now that you have a better idea of what an IT budget is all about, hopefully, you and your company’s leadership are ready to take the next steps in building out a budget.
If you’re a client with Innovative, don’t hesitate to set up a meeting with your account manager to discuss your budget. It’s never too early to at least start a conversation. The year can pass you by before you know it!
