IT budgeting tips for local businesses
How to create a realistic IT budget that aligns with your local business’s goals
2023 IT budgets will increase by an average of 4.8% compared to 2022. The IT budget as a percentage of revenue is now 4.2% on average. [1] Creating a realistic IT budget for a local business ensures that your technology investments align with your goals and financial capabilities. Continue reading to discover our tips to help you develop an adequate IT budget.
#1: Understand your business goals
Start by identifying your business objectives and how technology can support them as the foundation of your IT budget.
#2: Assess current IT infrastructure
Take stock of your existing IT assets and infrastructure. What hardware, software, and services do you currently have? Determine their condition, lifespan, and compatibility with your goals.
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#3: Prioritize your IT needs and plan for scalability
Categorize your IT needs into essential and non-essential categories. Prioritize investments that directly impact your core business operations and long-term goals.
IT budgets should not be set in stone. Review and adjust your budget annually to reflect changes in technology, business goals, and financial performance. Anticipate future growth and ensure your IT budget accommodates scalability needs.
Image source: Metrics 2023 IT Agenda
#4: Involve key stakeholders
Collaborate with department heads and employees who rely on IT systems. Their input can help you identify specific needs and pain points. Ensure that your team understands the IT budget and its implications. Encourage responsible spending and adherence to the budget.
#5: Research technology trends
Stay informed about the latest technology trends and how they can benefit your business. Consider the potential ROI of adopting new technologies. When making technology investments, consider the total cost, including the initial purchase and ongoing operating and maintenance costs.
Image source: Gartner, IDC
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#6: Consider cloud services and factor in security
Evaluate the cost savings and flexibility of cloud-based solutions. They can reduce the need for expensive on-premises hardware. Cloud computing is expected to grow at a compound annual growth rate of 17.5% by 2025.[2]
Allocate a portion of your budget to cybersecurity measures. Protecting your data and systems is essential in the digital age.
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#7: Create a contingency fund and invest in training
Set aside a portion of your budget for unforeseen IT emergencies or urgent upgrades. Having a contingency fund can prevent financial strain.
Allocate employee training and education funds to ensure your team can effectively utilize new technologies.
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#8. Seek expert advice
If you need assistance on certain technology investments or budgeting decisions, consider consulting with IT experts or hiring an experienced managed IT company.
They can help you compare your IT budget with industry benchmarks or similar businesses. This can provide insights into whether your budget is realistic.
By following these tips and tailoring them to your local business’s unique needs, you can create a realistic IT budget that helps you achieve your goals while effectively managing your technology expenses. Flexibility and adaptability are essential to successful budgeting in the ever-evolving technology landscape.
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Sources:
1: Metrics Maturity | IT budgets 2023 grow at a slower pace
2: Comptia | 25 Crucial Information Technology Statistics and Facts to Know