Budgets are crucial planning tools in any area of operations. As you plan for the strategic support of your business’s IT systems, an IT budget can help you to prioritize the things that matter, delineate areas where efficiency can be improved, and turn technology into an advantage.
But setting an IT budget can be complex.
We’re here to help. We’ve been providing IT support in St. Louis for decades, and we’ve worked with businesses around the area to strategically prioritize technology needs. Based on that expertise, here are our recommendations for crafting your organization’s IT budget.
Your IT budget is an investment, not just an expense.
First, to understand how to set a budget, it helps to frame things in a proper light: your IT budget is an investment, not just an expense.
That distinction is important, because it’s tempting to view expenditures in the short term, without factoring the return on investment into the equation. But that’s shortsighted, and ultimately inaccurate, because it doesn’t capture true value.
IT does add value – just ask any St. Louis business that has seen business improve with better IT support. Better IT increases uptime, meaning that more work happens more efficiently. IT leads to dependable systems that improve your reputation, which translates to increased customer trust and, ultimately, retention. And well-supported technology can give your business operational advantages that can help you to leapfrog your competitors in the market.
IT support adds value. So, consider your IT budget an investment.
The next question is: how do you make it a good one?
Factors to Consider in an IT Budget
The reality is that there is no set-in-stone standard for IT budgeting – the needs of businesses are too varied for that. However, there are a series of factors that should be considered to help your business determine needs and align them with budget allocation.
1. Capital Expenditures vs. Operating Expenditures
Is your IT budget going to be composed of capital expenditures, or operating expenditures? Capital expenditures tend to be one-time investments to maintain or increase the scope of operations. Operating expenditures, on the other hand, are smaller monthly or yearly payments with a long-term commitment.
As IT moves to the service model, more businesses are choosing to budget for operating expenditures. The value of operating expenditures, of course, is that they tend to come with less risk (and less upfront cost). Due to those factors, they may also be easier to pitch during budget meetings.
2. The Level of Security Your Business Needs
Tactically, one of the first factors to consider is the level of security that will be needed for your organization. Questions to ask:
- How many users and workstations does your organization have?
- How will user access be controlled?
- Are you handling sensitive data?
- Are there regulations that you must comply with?
It’s important to note that just meeting the minimum-security standards is often unwise; the costs of a ransomware attack or data breach are far greater than investing in better security mechanisms.
3. System Accessibility
Related to security is system accessibility. After all, the right people need to be able to access your IT systems – and hackers need to be kept out.
- Will you need to customize user roles and access?
- Where will users be accessing from? For instance, remote workers may require certain configurations that on-premise workers won’t need.
4. Storage Needs
Another factor that will influence budget is storage needs. How much data will your business need to process and store? This can vary greatly based on a host of considerations:
- How long does data need to be stored for?
- What systems need to be backed up, and how frequently?
- Does data need to be stored on-premise or in the cloud?
- How much data does your organization process?
5. Organizational Size
The size of the organization is one of the more straightforward IT budget considerations to make. Generally, bigger organizations entail more complexity, due simply to the greater number of system components and workstations. However, as a percentage of budget, larger organizations may actually require slightly less spending on IT.
A very general guideline is that mid-sized businesses spend 6 to 7% of their budget on IT, while large companies spend 3 to 4%. Again, though, those numbers are nowhere near set in stone and will vary across businesses and industries.
A few considerations:
- How many workstations are there?
- How many users?
- How many office locations?
- Is the organization local, national, or global?
6. Future Needs
Last but not least, future needs are essential factors in allocating IT budget. It can be tempting to budget for the short term, allocating only toward immediate needs – but it’s unwise. As an investment, IT needs must be considered in the long-term. Your St. Louis IT support provider can help to provide you with context as you plan for growth.
There are two main long-term considerations to make: technology and business growth.
There’s a common misconception that technological infrastructure is a once-and-done investment – meaning, once you purchase a laptop or server, you’re set for six or seven years.
The reality, though, is that technology changes quickly. We recommend reviewing hardware components annually. You might not need to replace, but you should stay aware of timelines.
In general, most workstations last 3-5 years, most servers 5-7, and most network equipment (routers and switches) 6-8.
Software, too, changes quickly, and updates need to be accounted for in IT budgets.
If your business is growing, the IT solutions that fit now may not fit next year. Failing to plan for growth can result in issues like mismatched systems, manual processes, and frustrated users. Your IT systems will struggle to carry a burden they weren’t designed to.
We’ve witnessed small businesses go from six people to 25 within the span of a couple of years. The reality is that the systems they start with (Gmail, or consumer versions of cloud applications) simply can’t carry a business past a certain point.
So, don’t limit budget considerations to the immediate context. Make sure to consider future needs.
Choose the Ideal IT Budget
Hopefully, these factors to consider when creating an IT budget will help you to allocate resources in a way that best meets your needs.
If you want to be sure that you’re aligning your budget correctly, don’t hesitate to get in touch.
At ATB Technologies, we’ve found that communication is key in setting accurate and effective IT budgets. After all, only when your St. Louis IT support provider understands your needs can they help you to meet them.
That’s why we emphasize hiring for communication skills and focusing on IT strategy – in addition to ensuring our people are technical experts.
Budgets can be difficult. But your IT doesn’t have to be. If you’re looking for IT budget assistance – and, in the end, IT that gives you an advantage – let’s talk.