“How much should we spend on IT?” has no universal answer. It depends on your industry, size, and risk. But you can build a sound budget.

Common benchmarking methods

– Per employee: annual IT spend divided by headcount. Useful for comparing year to year.

– Percentage of revenue: often cited ranges are in the low-to-mid single digits for many small businesses, higher for technology-dependent or regulated industries. Treat any benchmark as a rough guide only.

– Percentage of operating expenses

What belongs in the IT budget

– Hardware: purchases and lifecycle replacement

– Software and subscriptions: Microsoft 365, line-of-business apps, security tools

– Managed services or staff salaries

– Connectivity: internet, phone, and cloud services

– Security: endpoint protection, backup, training, and testing

– Projects: migrations, upgrades, and new initiatives

– Compliance and insurance

– Contingency: for unexpected failures and urgent needs

Steps to build the budget

1. Start with an inventory of devices, licenses, and contracts

2. Review the lifecycle plan: what will need replacing next year?

3. List projects with business justification

4. Add recurring costs and expected price increases

5. Include security and compliance needs

6. Add a contingency, often 5 to 10 percent

7. Review with the business: link spending to goals

Run versus grow

Separate “keep the lights on” costs from improvement projects. This helps leadership see where money goes.

Common mistakes

– Budgeting only for hardware

– Ignoring subscription price increases

– Skipping security spending until after an incident

– No planned replacement cycle

– No contingency

Monitor and adjust

Review quarterly. Track actual versus planned spending, and update forecasts.

DBR Soft can help you build an IT budget based on your real environment. Contact us for more information.