What Should Your Business Really Be Spending on I.T.?

Take the guesswork out of I.T. budgeting with this insightful guide.

Technology should work for you, boosting productivity and simplifying tasks without creating an unacceptable dent in your wallet. 

So how can you keep I.T. from becoming a liability? One word: Budgeting.

I.T. budgeting enables you to evaluate whether your current technology investments are truly driving results and how to optimize resource allocation for improved outcomes.

Let’s explore why I.T. budgeting matters, best practices, common pitfalls, and four categories to prioritize when planning technology spending. 

Why I.T. Budgeting Matters

First things first, why should you budget for your I.T.? Let’s explore four reasons why.

1. To avoid unplanned expenses

How many times in the last year have you made spur-of-the-moment purchases because something came up and you needed an immediate solution? 

Proper I.T. budgeting means investing strategically to avoid crashes and leaving room in the budget for technology that you need in the future. This eliminates surprise bills.

2. To prevent technology downtime and stress

Budgeting ensures uptime and peace of mind. With an I.T. budget, you can accurately estimate how long you can expect your technology to last and when to upgrade it. This will minimize downtime for your organization.

3. To accelerate your technology and organization

As a business owner, you want I.T. to accelerate your technology and organization. Budgeting allows you to be more effective at fulfilling your vision.

4. To protect against technology threats

I.T. budgeting enables you to evaluate your organization’s assets and how to properly protect them against rising cybersecurity threats. 

I.T. Budgeting Best Practices

Here are some rules to guide your I.T. budgeting:

• Know your refresh cycle: How long do you expect each piece of technology in the organization to last before you need to get an upgrade?
• Decide whether to lease or buy: Different organizations are going to have different answers to this question, and that’s okay. If you lease, you’ll pay a fixed price for the technology every month or year. Otherwise, you’ll need to purchase your technology outright and pay for it all up front.
• Accurately estimate the cost of future purchases: Be reasonable. If you want to build a 10-year technology budget, for example, you must understand what the costs are going to look like within that time frame. Bringing an I.T. consulting company in to estimate that information for you will help.

Common Pitfalls When Budgeting

As with any process, there are some things to watch out for. Many small and medium-sized business (SMB) owners make these mistakes when budgeting for their I.T. packages:

• Choosing the cheapest technology option without considering quality or long-term impact.
• Failing to review and update budgets to reflect changing needs.
• Underestimating or overlooking I.T. expenditure on critical areas such as cybersecurity, hardware upgrades, and network infrastructure improvements.
• Focusing on short-term solutions instead of aligning I.T. investments with long-term business goals.
• Allocating financial resources to unnecessary technology driven by trends rather than actual business needs.
• Not leveraging strategic I.T. budgeting help.
• Not setting aside a buffer against unforeseen contingencies.

Avoiding these common pitfalls can help optimize your spending, which will keep you on track toward growth.

The Four Critical I.T. Budget Categories You Should Focus On

What should you prioritize when planning your I.T. expenditure? It depends on your critical business objectives. You should strategically invest in the most relevant areas to achieve those objectives. SMBs generally break their I.T. budgets down into four categories:

1. Infrastructure

If you plan to expand operations or enter new markets, you should prioritize infrastructure spending. Your I.T. infrastructure comprises all the software and hardware you use. 

This includes computers, servers, cloud storage, business apps, as well as productivity, communication, and collaboration tools. Your budget should support current capacity, as well as factor in future additional hardware, software, and license purchases to manage increased workloads efficiently.

2. Support

Accounting for your current and future support needs is also essential to an accurate budget. Support is the hands-on work that your in-house or outsourced I.T. team does to keep your technology up and running. 

Items that fall into the support bucket include:

• Infrastructure configuration and deployment
• Issue troubleshooting and resolution
• Routine maintenance and patching
• Onboarding of new users or systems
• Vendor coordination

Always expect an increase in support spend if you’re expanding your infrastructure and build a buffer. That said, ongoing support costs will be predictable and minimal if your I.T. partner takes the proper steps to set up and maintain your environment.

3. Security

Security should never be an afterthought when budgeting for your I.T. This is especially true if you handle sensitive customer and business data or operate in a highly regulated industry like manufacturing or finance. 

Here’s what your security budget should cover:

• Regular cybersecurity and compliance audits
• Robust threat prevention, detection, and response 
• Backups and business continuity
• Employee cybersecurity training

Security requirements vary across industries, so it’s worth keeping these costs in a distinct line item rather than grouping them under “infrastructure” or “support.”

4. Strategy

Finally, you need a solid plan to minimize wasteful spending and maximize the value of your I.T. investments. 

SMBs will often enlist the services of a Virtual Chief Information Officer (vCIO) or an I.T. consultant if they don’t have an internal resource to guide the I.T. strategy. This will help them define their I.T. strategy and make more informed decisions for optimal outcomes. 

Sharpen Your I.T. Budgeting With Proactive Help From Attentus

Need help with your I.T. budget? Attentus Technologies can help.

One of our core values is to “be the answer” by providing solutions to the most pressing pain points SMBs face. We can help you assess your current I.T. spending and strategize how to optimize your budget for minimal compromises.

Schedule a free custom consultation to discover how to spend smarter on technology.