How to set a realistic technology budget for your business

How to set a realistic technology budget for your business

Last year, global IT spending reached nearly $4 trillion, with companies spending on average more than 3% of their revenue on technology. Considering the rising tide of cyberthreats to counter, and the constantly evolving demands of customers, these figures aren’t likely to get smaller in the foreseeable future.

However, a lot of companies probably spend far more on IT than they need to. This is especially likely to be the case among established businesses, which often cling on to expensive in-house systems they invested in years ago. Innovative, fast-moving companies, on the other hand, are learning to operate in leaner spending environments, driven by things like managed services and cloud computing.

Here’s how they’re making it happen:

Establishing a long-term IT vision

Adaptability is critical in today’s fast-paced economy. Businesses must do everything they can to prepare themselves for future economic challenges. Disruption is the only constant in the world of technology, and customer demands are constantly evolving alongside a rising tide of new cyberthreats and other challenges.

Establishing a long-term IT vision is perhaps the greatest challenge of all. What works today may not work tomorrow, and technological obsolescence remains a major concern. Effective and strategic solutions require dynamic thinking and continuous improvement and innovation. Your technology spending must align with your core business mission and be able to scale easily with customer demands and industry disruptions.

Prioritizing your needs

Few small businesses can afford to fully satisfy their IT needs, especially if they’re trying to do so 100% in-house. While everyone wants the best people on their team, it usually makes more sense to outsource expertise that is as cut-and-dried as tech support.

Instead of prioritizing technology people, you should focus on your technology’s impact on your core mission. Start by defining IT projects or capabilities by categories such as critical, important in a couple of years, and things that would be nice to have but aren’t essential. Continuous improvement is all about iteratively expanding your capacity and adding value to the organization.

Common expenses business leaders overlook

It’s only natural to worry about the biggest expenses when you start going over budget, but it’s the smaller expenses that often cause problems. When coming up with your technology budget, don’t forget the following commonly overlooked factors:

  • Consumables, such as ink and toner, replacement parts, and batteries
  • Software, including both subscription-based and one-time-purchase products
  • Infrastructure, such as office cabling and networking hardware
  • Maintenance, including repairs, premium support services, and product updates
  • Training, including security awareness and compliance training

Be sure to include all possible expenses in your IT budget. Then, add a further 10% buffer to account for any unforeseen expenses.

The rise of the service economy

In the old days, businesses relied on in-house data centers, servers, and desktop workstations. Heavy computing tasks would be handled on-site, which in turn meant the responsibility to maintain, repair, and upgrade their systems was shouldered by business owners. Many of these expenses were wholly unpredictable and impossible to budget for.
While today’s service-focused economy doesn’t always translate into huge cost savings, it does mean technology expenses are far more predictable. Most companies are now moving their computing workloads and data storage over to the cloud, both to enjoy more control over costs and scale with demand.

Hardware-as-a-Service (HaaS) is one of the latest trends in the service economy. Despite the rise of cloud computing, more businesses are adopting smart technologies like sensors, smart security systems, in-store beacons, and even drones. But with HaaS, they can instead rent all their hardware with a contract that includes installation, servicing, and customer support.

NetQuest is redefining small business technology with exceptional IT services and solutions that you can count on. Call us today to schedule your first consultation.

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