Modern business success depends on the extent and speed of adopting the most recent technological innovations to boost productivity, minimize costs, and increase competitiveness. Having a dedicated IT budget ensures that your company’s tech spending is allocated across the growth areas. Creating the budget also means accounting for your company’s IT objectives. However, are you aware of the main components that should be included in your IT budget? Let’s discuss how to leverage your planned IT expenses to make the best technology investments for your company.
The Main Components of a Good IT Budget
The average IT budget accounts for approximately 8% of a company’s annual revenue. However, a budget is only effective as long as it targets limited resources at the core areas within your organization.
Your company’s tech spending should be distributed across these top eight categories:
1. IT Staffing Should Be A Major Factor In Your IT Budget
You will encounter scenarios where you need to augment your in-house IT department with on-demand IT staffing. Plan ahead by including outsourced IT staffing to your IT budget. IT staffing can help you fill a gap if your top IT employee unexpectedly leaves or if you need regularly scheduled onsite support for an all-remote Managed Services Provider (MSP).
2. Software & Hardware
A good IT budget should include routine software-as-a-service (SaaS) subscriptions and the cost of updating your hardware devices, such as workstations and network devices. Technology investments in automation software simplify routine tasks and redirect your team’s efforts to high-yield activities.
Pro Tip: Perform an annual infrastructure assessment to update your asset inventory list and identify which hardware devices need to be updated since this is critical for your company’s cybersecurity.
You will also need to keep your systems up-to-date and secure. Plan to include ongoing maintenance and support costs to your budget as well. Your company’s hardware and software will require updates, patches, routine upkeep, and other essential support services.
3. IT Projects
Your IT infrastructure is the backbone to your entire business operations. Specialized IT projects make you more competitive in your market and these one-time project investments also need to be included in the budget.
4. Include IT Security In Your IT Budget
Cybersecurity breaches have increased by 67% since 2014, and the first half of 2019 saw at least 4.1 billion records exposed in such breaches. Your company’s tech spending should also account for network and data security requirements in areas such as enterprise-level software, anti-malware, data management software, and encryption technologies.
5. Hosting Services
The cloud is the new frontier for market competitiveness and Gartner predicts an 18% increase in public cloud end-user spending in 2021. All cloud services and the associated implementation costs must be a part of every business’s planned IT expenses.
6. Backups & Data Protection
Every business should have a backup and disaster recovery plan in place, and the related costs should also be included in the planned IT expenses. Accounting for these backup recovery services will ensure limited downtime and business continuity.
7. Cyber Insurance
According to a CyberScout survey, 76 percent of SMBs experienced cyberattacks in 2019 and approximately 69% of respondents did not have cybersecurity insurance for their business. Many organizations have begun including Cybersecurity Insurance coverage in their IT budget. This coverage is critical if they face losses from failure to protect their data or exposure when a vendor is compromised.
8. IT Training
Making the right technology investments also means investing in employee training to extract all the benefits. This tech training should not only focus on navigating the technology but also cybersecurity best practices.
Finally, keep tabs on your tech spending whenever it does not neatly fit into these categories listed above. This will help you account for tech-related advancements, emergencies, and unexpected events as you review next year’s budget.
Simplify Your Planned IT Expenses With Net Friends
Now you know what should be included in your company’s IT budget. As a Managed IT Services Provider, Net Friends is positioned to help you consolidate all your tech spending into a single, predictable, monthly expense. We will ensure that your company keeps abreast with the latest tech innovations while increasing productivity, cybersecurity, and competitiveness, all at an affordable cost. Contact us today to get comprehensive support to surpass your strategic goals and increase your market share.