IT is the backbone of an organization — it’s what makes operations and communications run smoothly. But it can be a challenge to know how much money to budget for your business’s IT needs. Spend too much and you might be wasting resources that could be allocated to a different area of your business. Spend too little and you risk not having the strong and supportive infrastructure that you need to be successful.
A growing trend among many companies is to outsource their IT as much as possible. By paying a monthly subscription-based fee to a managed services provider (MSP), companies can reduce their spend on IT employees and hardware — and put all of their focus on running their business.
But regardless of whether you choose internal or outsourced IT, what should you be paying for your business’s IT needs? Read on to find out what the average business spends on IT, and how you can create a healthy IT budget for your own company.
What’s the Average Cost of IT Support for Business?
Of course, the amount of your budget that you dedicate to IT will depend on many factors, including your industry, business size, type of IT (internal vs. external) and specific needs, but it’s helpful to know the averages of other businesses for comparison.
According to a recent study by Deloitte Insights, the average business spends 3.28 percent of their revenue on IT. Banking and securities firms spend the most (7.16 percent), and the construction industry spends the least (1.51 percent). It’s important to factor your business size into your budget, since larger companies (over $2 billion) tend to devote a smaller percentage on IT.
These numbers serve as a strong baseline that you can compare against your own spending. They can help you determine whether your current IT budget is too lean or too heavy, and then tailor it to the specific needs of your business. If your IT budget is too low, your business might not be running as efficiently as it could be. But on the other hand, if your current IT spendings are too high, you could be wasting an opportunity for growth in other areas of your business. As with any budget, it’s all about balance.
Determine Your Current Expenses
Now that you know the average IT budgets for different types of businesses, it’s important to compare them against your own current spending. Determine how much you’re spending on IT, broken down by categories such as:
- Phone server management and support
- Network firewall /anti-virus / security
- Backup and disaster recovery
- Mobile device management and security
- Server management and support
- Cloud-based wireless (with guest networking)
- Software packages and hosted email
Keep this information on hand so that you can assess which categories of your IT budget you can scale up or down according to the needs and projections of your business.
Establish Your IT Needs
This is another critical component of determining a budget that will work for everyone in your company. Consider sending out an all-staff survey to find out exactly what types of IT your employees need to be as productive and efficient in their roles as possible. Ask what they use the most, what they can’t live without, and what they think can be scaled down or omitted completely.
From a broader perspective, what are the IT needs of the company overall? Does it make more sense to keep or hire an internal IT department, or will your business run more efficiently by leaving the IT support up to a managed services provider?
Get a Risk Assessment
In order to determine the most realistic IT budget, it’s important to identify possible risks to your systems and data. IT risks include things like hardware and software failure, spam and malware attacks, natural disasters such as fire or flood, and even human error. One of the best ways you can plan for these emergencies is to get a risk assessment. You can hire a third party to perform the assessment or perform it internally.
Once you’ve gathered information about all the possible IT risks that could threaten your business, you can then perform a risk analysis to gauge the likelihood of one of these events occurring, and plan and budget accordingly.
Create Your IT budget
Of course, the specifics of an IT budget depend on the many factors we’ve outlined above.
But once you’ve collected data on your current spending, identified potential emergencies through a risk assessment, and determined your own staff and company-wide IT needs (current and future), you’re well prepared to create your own unique IT budget.
Need advice on how to stretch your IT spending or the best upgrades to invest in for your IT equipment? Download our e-book Strategic Ways to Increase Efficiency of Your Technology Platform today! You can also contact us here at Taylored Systems to find out how we can tailor our IT solutions to best suit the needs of your business.