IT Budgeting – How Much?

January 13th, 2016
IT Budgeting – How Much?

IT Compliance

How much should you spend on technology?

At this time every year, we’ve usually wrapped up most of our client meetings to discuss end-of-year budgets. For our managed clients, we look at their technology needs and trends over the past year. We also look at upcoming security concerns (e.g. Microsoft or Cisco no longer supporting a product), business growth plans, or new technology that can aid the overall achievement of the goals of the business. In today’s blog post, we’ll address one of the biggest questions that we’re asked during these meetings: How much should I spend on IT?

Several national studies have shown that most small businesses spend between 2-6% of their annual revenue on technology. In our experience, these numbers are accurate. If you’re in a low-tech industry or one with a low ratio of computers to employees, the lower range of 2-3% is usually sufficient. Retailers or some manufacturers fall into this category. If you’re in a high-tech business segment or have a high ratio of computers to employees, 5-6% is more accurate. Doctors, accountants, and architects are a few of the types of professionals who fall into this category.

Surveys among small and medium business owners show that small businesses spend roughly $2,750 per year per employee on their technology needs. Medium businesses, defined as 500 employees, spend on average $600 per year per employee. These numbers include the amount spent on hardware/software (e.g. computers, servers, network hardware, etc…) plus services (labor to build and manage the infrastructure).

Surprisingly, the growth of cloud computing hasn’t yet reduced the spend of most businesses on technology. In many cases, the businesses shift cloud savings to additional infrastructure (e.g. faster internet speeds or redundant connections). In most cases, however, cloud opportunities have allowed businesses to have elastic growth or work more efficiently.

Give us a call today to discuss how we can help your business achieve your goals with technology.228-392-7133