What Should Your IT Budget Be?February 28, 2020 12:00 pm | Published by Next Horizon
Recently updated on February 24th, 2022
Technology seems to be seeping into every aspect of our lives. For businesses, technology improvements mean more efficient operations, access to game-changing insights and the ability to interface more directly with customers. With benefits like that, it is imperative that your business has a budget to assure that technology can continue to optimize your business units. However, with consistent changes in technology, it may be hard to know exactly how much to spend on your IT budget every year.
Why Should My Business Invest in IT?
As your business grows or shrinks, your IT needs change. Many business owners think that IT is simply a safeguard for when your technology fails, but your IT infrastructure is so much more than that. Think of your IT budget as an investment in the growth and prosperity of your business. IT Strategy safeguards critical processes and information, as well as improves company-wide efficiency — allowing your employees to focus on their work at hand.
As stated earlier, technology is permeating every aspect of our lives. This trend pertains to consumers as well. Their expectations have grown significantly. They want to interact with businesses in a highly efficient and value-driven way. Having a solid, progressive IT infrastructure will keep you on top of consumer demand, provide experiences that can increase brand loyalty and keep customers coming back.
How Do Other Businesses Distribute Their IT Budget?
There is no surprise that businesses’ top two spending priorities involve cloud-based applications and the building of their cloud infrastructure. The ability to solve problems from anywhere in the world has made cloud technology an obvious point of investment for many businesses.
Another spending priority that is exponentially growing is in the Business Analytics (BI) sector. Insights gathered from your data infrastructure play pivotal roles in improving your business from operational efficiencies to increased marketing performance. Oddly enough, it is smaller companies (up to 100 employees) who have the highest adoption rates of BI.
IT Strategy safeguards critical processes and information, as well as improves company-wide efficiency — allowing your employees to focus on critical work in their respective roles.
What are Other Businesses Spending on Their IT Budget?
According to SearchCIO, small and medium-sized businesses spend more on information technology than the larger companies. The average small business (under $50 million in revenue) spends nearly 7%, mid-sized businesses ($50 million to $2 billion) spend 4.1% and large businesses (over $2 billion) spend 3.2% on their IT needs.
It’s important to note that many businesses will have different needs in terms of their IT infrastructure. Manufacturing is an industry that is heavily based on multiple Stock Keeping Units (SKUs), people and/or machinery to get work done quickly. Operations are designed for quality and fast outcomes. It makes sense that, on average, those businesses spend more on IT.
The construction industry, however, may have an integrated project management system, but it’s more important for those businesses to be hands on with their projects — both in planning and execution. This may lead to a lesser spend on IT.
How Much Should My Business Spend Be for IT?
It may seem easy to look at the information in this blog to generate an IT budget, but that will not do your business justice. Every business is different. Take a hard look -not only at your current operations- but how you want your business to look in 5 years.
Developing an IT budget is about solving internal problems now and forecasting external trends that may eventually affect your business. Your business needs should dictate how much you allocate to your IT budget. Utilize IT strategists in order to develop a custom IT plan for your business.
Next Horizon provides holistic technology solutions for businesses looking to improve sales, increase agility and optimize productivity. From deploying dedicated development teams to building bespoke business applications, Next Horizon uses its 40+ years of experience and award-winning talent to provide technical business solutions for its clients.
Tags: IT, IT Budget, IT Strategy
Categorised in: IT Solutions