How Much Should Your IT Budget Be?

In today’s economy, or honestly, any day’s economy, it’s wise to make smart, planned investments. You don’t want to be stuck spending money you don’t have, or forcing yourself to cut corners because an emergency evaporated your funds. That’s why it’s important to establish an IT budget, and align it with your other business goals.

What is an IT Budget?

Before we get down to brass tacks, it’s important to understand that your business technology isn’t just an expense. It’s pretty easy to look at it the same way you might look at an electricity bill or insurance, but your technology should be doing more than just costing you money.

Look back at the original nature of computing technology and what it was designed to do from the very beginning. Computers and software are designed to help you and your staff get more done in less time. We’re all so used to computers that it might not feel that way today, but imagine doing all of your business without them.

Imagine running an organization using paper memos and Rolodexes. Sure, it’s possible and it worked for many businesses for decades, but today you can get so much more done in less time thanks to modern software and hardware.

You should be treating your IT like an investment, and expect it to generate profit by allowing you to do more with less. If it feels like all you are doing is paying to keep your IT running, then there is something wrong, and your IT budget either isn’t fully laid out, or there are other problems that need to be addressed. Either way, with the right plan and right budget, not only can you reduce the number of issues and surprise expenses you run into, but you can actually plan on doing things that will save you time and money in the long run.

What Should My IT Budget Cover?

There are three basic buckets that your IT budget will need to be broken down into. They are:

1. One-time expenses
2. Ongoing expenses
3. Support/Emergency expenses

One-Time Expenses

These are pretty straightforward. This includes hardware purchases, software implementation, and consulting fees. In some cases, hardware might fall under ongoing expenses if you lease hardware or subscribe to a hardware-as-a-service model, but that’s going to be less common.

Your biggest one-time expenses are probably going to be regular upgrades, and it’s important to have these planned out in your budget.

The typical workstation has an average lifespan of about 3-4 years. Proper maintenance and support can usually add an additional year or two to a decent workstation.

Servers have a longer average lifespan of about 5-8 years, and again, thorough maintenance and pristine circumstances will keep you on the longer end of that spectrum. The rest of your networking equipment will usually fall somewhere in between, depending on the device and how it is treated.

This means your budget needs to account for hardware refreshes, and if you can squeeze another year out of a workstation, you can consider that a bonus.

Ongoing Expenses

This consists of your software licenses, subscriptions, support contracts, hosting, and essentially any other monthly or yearly service. On top of that, if you have dedicated in-house IT staff, you’ll want to budget in their salaries, promotions, benefits, and the costs of recruiting if needed.

Your ongoing expenses also need to cover the support and maintenance of your IT infrastructure. That includes ongoing maintenance like installing patches, daily backup checks, monitoring event logs, keeping security systems updated, and all of the other day-to-day IT tasks.

Many Massachusetts businesses have opted to outsource this type of work to reliable managed service providers like Datalyst. While this does lead to another expense, it is usually much more effective than hiring internal staff to perform the work, as it can be done remotely with the right set of tools and knowledge. On top of that, Datalyst offers a wide range of other services, including help desk support, cybersecurity, compliance, and business communication services as well, meaning one contract (and more importantly, one relationship) can serve a much broader gamut of your technology needs.

Support/Emergency Expenses

If your IT roadmap thoroughly covers hardware and software updates, your emergency budget shouldn’t need to be very high, but it does help to be prepared in the event of an issue. 

We recommend having a spare workstation or two that is kept in storage and updated quarterly or so just in case a staff member’s computer suffers from a hardware failure and a replacement part needs to be ordered. While this type of issue has become more seldom over the years, it can make a big difference when the user can get right back to work after a brief rollout of the spare workstation.

Ensuring that you have a little money saved up for a bigger emergency isn’t a bad plan, especially since modern cybersecurity attacks are built around causing disruptions. A really bad ransomware attack could prevent your staff from being productive for a couple of days; while proper preparedness and proactive measures should minimize these threats and reduce the time it takes to recover. Having the budget to survive them if needed will help prevent losses that you can’t afford.

Let Datalyst Help You With Your IT Roadmap

If you don’t have an in-house CIO to handle the complex decision-making that goes into establishing an IT roadmap, you can rely on Datalyst. We don’t just fix computers—our best work happens when we partner with businesses like yours to establish long-term relationships and build your technology around your business goals.

Want to learn more? Give us a call at (774) 213-9701 to set up a discussion.