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How Much Should My Business Spend On IT?


Spend on IT

Determining how much a company should spend on IT can feel like walking a tightrope, especially for smaller business owners. Spend too much, and you might end up forced to skimp on other critical areas of the business; spend too little, and you might lose a competitive edge or leave your business vulnerable to hackers. So, what’s the “just right” amount that keeps everything balanced?

The truth: it depends on your business.

There isn’t a “one size fits all” magic budget number when it comes to IT (and any Managed Services Provider who tells you otherwise isn’t being honest). Every business owner should carefully analyze the company’s current IT needs and options as well as future plans for growth. That being said, it’s helpful to understand what other businesses budget each year as you determine your own allocation.

What do most businesses spend on IT?

While it varies by industry, a study by Deloitte found the average IT budget to be 3.28 percent of revenue. Smaller businesses tend to have a higher spend on IT than larger ones due to economies of scale. Businesses in the banking and securities industry average over seven percent, while manufacturing and construction companies average under two percent.

Determining your company’s IT budget

Regardless of the size of your business or your industry, setting a solid strategic IT budget is very important. Here are several factors to consider:

  • How much are you spending now?
  • What is (or isn’t) working for you in terms of IT?
  • Is your team losing productivity due to outdated technology?
  • What are your business goals? 
  • Are you forecasting significant growth or the addition of new locations?
  • Does it make more sense to outsource IT than to bring on internal staff?

If budgeting for IT feels overwhelming, you don’t have to go it alone. A strategic Managed IT Services partner can be a great resource for you. These experts are adept at determining exactly what technology solutions your business needs to stay competitive, productive and secure, and they will help you determine exactly what your company should spend on IT each year. 



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