Making every penny count is critical to the success of your small- or mid-sized business (SMB), and this is especially true when it comes to your IT budget. Deciding how to allocate your funds can be tough, but there are a few things you can keep in mind so you can be sure to spend your money in the best way possible.
What should you consider when planning your IT budget?
Take the following factors into consideration to avoid making IT budget mistakes and ensure that your tech investments deliver.
1. Business size
Your IT budget should be proportional to your organization’s size — the larger a company, the more complex its IT needs. For instance, a large chain store has to invest in enterprise-grade systems to manage several retail outlets, and this can eat a greater portion of its IT budget. On the other hand, a small brick-and-mortar business can afford to spend less on IT, but it should still invest in services and solutions that guarantee smooth and secure operations.
2. Nature of business
Businesses that rely heavily on technology will need to allocate a larger percentage of their budget to IT, so assess which technology is necessary to run your business and budget proportionally according to those IT nonnegotiables.
Also, consider whether your industry has specific IT compliance requirements. Ontario, for instance, requires health information custodians to be compliant with the Personal Health Information Protection Act (PHIPA). This means that all businesses handling personal health information (PHI) must invest in technologies that will enable them to securely collect, use, or disclose PHI.
3. Growth potential
If you are a rapidly growing company, then you will need to invest in scalable IT infrastructure that can support your future growth. Conversely, if your company is showing slow but steady growth, then you can save money by investing in less complex IT systems.
4. Risk level
Investing in technology can be expensive, and you may not always reap the benefits you hope for, so make sure that you only take risks you’re comfortable with. Keep in mind that if you are willing to take on more risk, then you can invest in cutting-edge technology. If you prefer to play it safe, then you can stick to tried-and-true solutions.
5. Overall company budget
The total money you can spend for your business will be a major factor in deciding how much you allot for IT. You need to make sure that you allocate enough money to cover your essential IT needs while also staying within budget across departments.
How should you allocate your IT budget?
Now that we've gone over some general considerations for IT budgeting, let's look at some specific areas where you should invest your budget.
- Hardware – How much you need to spend on hardware will depend on your business needs. If you need to purchase new computers or other hardware, then this area will obviously eat into your budget. However, you don't always need to buy the latest and greatest hardware. Sometimes, older models with adequate specs will suffice for a couple more years before you really need to replace them.
- Software licenses – If you use commercially licensed software, then you will need to spend more to cover the cost of these licenses. But this doesn’t mean you’ll have to drain your funds. There are ways to save money on software licenses; for instance, you can often get discounts if you purchase multiple licenses at once.
- IT services – This can include fees for managed IT services, cloud computing, cybersecurity, and others. The costs of these services will vary depending on your specific needs and whether you outsource them or take care of them in house. Partnering with a business technology expert is a cost-effective way to gain access to a wide variety of IT services, allowing you to enjoy IT solutions beyond the limits of your budget.
- Support and maintenance – This area comprises costs of performing routine upkeep, installing patches, conducting updates, and more. Always leave some room for extra support in your budget, especially if you don’t have a dedicated IT team that can address all of your concerns.
Related reading: The best ways to protect company data on a budget
By taking these factors into account, you can create an IT budget that meets your needs without breaking the bank. But always remember to stay flexible and be willing to adjust your budget as your needs change. Schedule a discovery session with our IT experts at XBASE Technologies to learn more about how to make the most of your IT investments.