IT budgeting. It may not be the most exciting subject, but it is important to your business.
You need to know if you’re spending too little or too much on technology, and it’s important that you get the maximum return on your technology investments. Your business probably relies heavily on IT, so skimping in this department can create problems.
So the big question is:
How do you calculate how much you should be spending on IT?
Begin With Averages
The first thing we need to do is identify what actually falls under an IT budget.
Your IT budget will include hardware and software investments that relate to IT, as well as IT department personnel costs. Computers, servers, cloud services, and IT support staff all factor in.
According to Deloitte, most organizations spend 3.28% of their total revenue on IT expenses. Companies in the financial sector — with huge compliance and cybersecurity concerns — spend around 7.16%.
Counter to the financial sector, four growing industries came in below the average for IT spending:
- Manufacturing (1.95%)
- Construction (1.51%)
- Energy and resources (2.50%)
- Consumer business and retail (2.04%)
Because these sectors are growing, their average IT spend is also on the rise. In some cases, such as the construction industry, IT spend averages have climbed over 45% in the last year. Why such a huge jump?
It’s simple. All sectors are realizing that there’s significant ROI to be found in IT. The right technology can help you work faster and more effectively, increase security, and amp up morale.
So how do you figure up your optimal IT budget? Take the following steps:
1. Start with your overall budget
Hopefully you already have some form of budget for your business — otherwise it’s very hard to track spending or allocate funds. If not, you’ll need to begin by creating your overall budget from the ground up.
2. Consider what’s most important to your business
Give some thought to where technology spending can do the most good for your business. More spending is not the same as smart spending!
For example, let’s say you operate a sales consultancy. You’ve got a definite need for reliable screen sharing and video conferencing since that’s how you talk to most of your clients and conduct your own sales calls. With that in mind, it’s probably a good idea to prioritize a communications platform that meets your needs.
3. Think of information technology as a partner, not a hassle
IT got a bad rap over the past few decades. People didn’t really want to talk about it. It was a “necessary evil” — you needed it, but only so that you could get your day to day business done, all the while hoping that no computers crashed and no data was mysteriously lost.
Times have changed. Today’s business technology is far more compelling.
SMBs are quickly discovering that modern technology solutions (combined with good support) not only keeps everything humming along, but also contributes to the overall growth and success of the company.
Remember that IT is an investment, not an expense. Once you’ve made the mindset switch, it’s a lot easier to understand what kind of technology makes the best use of your company’s money. If you need help budgeting for your unique IT needs, give us a call at (972) 354-1600 or send us a quick message. The experts at NCC will be glad to help!