Your Annual Technology Budgeting; the necessary evil of all successful organizations. Business leaders analyze costs and expenditures for the upcoming year and compare...
Having a well-organized IT budget is essential for small businesses to succeed in the world. The questions are, how much should an IT budget be in a business? And how do I make an IT department budget?
How Big Should an IT Budget Be?
Unfortunately, there is no one-size-fits-all answer as the IT budget should really be decided on a per-business basis. There are a number of important factors to consider when weighing up the perfect IT budget for your small business:
Business Size and Industry
The industry your business serves and the size of it can have a significant role in determining your budget and the amount of technology you require. For instance, a business that depends on employees working online and the number of locations will require a greater budget than an organization with a handful of employees.
Business Goals and Growth Plans
Small businesses must consider their growth plans in the short and long term. Will you be looking to continuously implement new technologies and upgrade your systems? As this will require a larger sum of money.
IT Requirements and Infrastructure
This leads to evaluating your existing IT infrastructure. Everything from hardware to software and the network you’re running on. Small businesses must consider maintenance costs moving forwards, the cost of upgrades, and what pieces of equipment need replacing.
Compliance and Security Needs
Of course, it’s important to observe any necessary compliance regulations, depending on your industry. You may need to dedicate additional resources to the security and privacy of your data, especially if you’re in the finance or healthcare industries.
Essential Components of an IT Budget
The components you deem essential parts of your business’s IT budget will vary depending on your business goals. Here are some common components that must be included:
Hardware and Software
Businesses of any size will need to allocate funds for purchasing or upgrading their current systems. This includes servers, equipment, licenses, and more. Consider what may be required in the future as technology continuously evolves. It should also consider routine maintenance to avoid any costly disruptions.
IT Staffing & Support
Within the IT budget, there must also be room for the servicing of your IT network. Whether that’s the salary, benefits, and training of an on-site staff member or the cost of having to outsource your IT maintenance to an IT management service provider or an on-call technician.
Cloud Services and Hosting
As cloud computing is continuously becoming more popular, small businesses should ensure a part of their budget is allocated to cloud-based services. This can include anything from data storage to SaaS solutions to help leverage the business’s scalability.
Protecting your network and data against cyber threats is an absolute must. This may involve anything from investing in firewalls, data encryption tools, antivirus software, and training programs. Having a robust cybersecurity setup can help mitigate the chances of financial or reputational loss.
Best Practices for Optimizing IT Spending
If you’re looking to be smart with your spending, here are some best practices:
Regular Technology Audits & Smart Investments
By assessing your existing IT infrastructure and focusing on its overall efficiency, you can single out technologies that can be removed or replaced to optimize your budget. Conducting regular IT infrastructure audits will ensure you see opportunities to improve your system to stay aligned with your business growth objectives. You may find gaps where you can introduce updated technology to help streamline tasks and improve productivity while eliminating unnecessary costs. Prioritize investments in these areas.
Embrace Scalable Solutions
While upgrading technology, ensure you find technologies that can accommodate your growing business to optimize your spending based on demand.
Explore Outsourcing Opportunities
Small businesses should consider where and when they can outsource to specialist IT-managed service providers to gain expert advice that may not be possible in-house. These services offer efficient operations at a cost-effective price.
Track and Evaluate Expenses
It’s important to track and evaluate any expenses on your IT infrastructure to ensure you’re receiving a return on investment (ROI). If you identify areas where you’re not seeing ROI you can reduce or reallocate your budget to suit.
IT budgeting for small business owners requires a lot of careful thinking and planning. By understanding exactly what your business needs, and allocating the correct budget and essential components, you can ensure you have everything you need to work towards your business goals and growth. By incorporating best practices and staying proactive, you will relish in this ever-evolving technological landscape. If you wish to learn more about IT budgeting, please contact us. Our team of experts here at MicroTech are readily available to help you reach your business goals!