There’s no simple answer to what the cost of IT equipment should be for your business. Every company has unique needs, and the amount of money you should budget for IT may vary depending on the complexity and size of your company. If you spend too little, you might risk not having the strong infrastructure you need to be successful, and if you spend too much, you may be wasting resources that should be allocated to other areas of your business. Read on to discover what the average company spends on IT, and to create a realistic budget for your business.
What is the average cost of IT equipment for business?
The amount of money you allocate to IT equipment depends on various factors, including your business type, specific needs, type of IT (external vs. internal), and industry. However, it’s crucial to know the averages of other companies for comparison. According to a study conducted by Deloitte, the average company spends 3.28% of its revenue on technology.
The construction industry spends the least – 1.51% while securities and financial firms spend the most – 7.16%. When creating your budget, it’s essential to consider your business size, since bigger enterprises with over $2 billion in revenue allocate a smaller percentage on IT. When it comes to installing and maintaining your network, some providers charge a range of $1500-$2000 which usually includes a router.
Setting up a server costs $100-$150, but it depends on what should be done. The cost of installing and maintaining one network also varies depending on your location. To get the best value for your money, choose a provider who can help you develop a network you can expand, upgrade and improve easily according to your needs.
These numbers serve as a baseline you can use to compare against your spending. They can help you analyze your current IT budget to see if it’s too low or too high so that you customize it to your business needs.
5 things to consider when preparing your IT budget
If your budget is too lean, your organization may not operate efficiently as it should be, and if your current spendings are too heavy, you could be crippling growth in other areas of your organization. Here are tips to consider when preparing your IT budget:
Set aside money for software and hardware renewals
When budgeting for IT, track software expiry dates and hardware warranties. Usually, computer and server hardware have a warranty of 3-5 years. Conversely, some software have an expiry date. For instance, Microsoft provides updates and support for up to 10 years after the initial release date.
After software and hardware expire, you’ll have to buy extended support from the manufacturer or troubleshoot any technical issues yourself. Over time, these options may cost more, so it’s better to upgrade your software or hardware. Make room in your budget for renewals one year before these products expire.
These will give you enough time to compare prices and look for new programs and devices so that you make informed decisions.
Tailor IT budget allocations
At the beginning of each financial year, every company allocates its budget for different projects and departments. The same applies to IT. ideally, you should set aside money for major components, such as cybersecurity – costs related to data protection such as security training, incident response, and threat prevention strategies.
You should also invest in cutting-edge technologies such as cloud services and business intelligence software. Upgrade costs for your current IT infrastructure, support, and basic maintenance should also be included in your budget, as well as costs for implementing disaster recovery and backup data plans. You can adjust the percentage of your budget allocated to every component depending on your organization’s priorities.
Define your operational expenses
When creating your budget, remember to allocate money for maintaining your infrastructure, such as system updates, cybersecurity, and data backups. Utility costs, such as cooling and electricity are also associated with running your IT systems. These monthly fees add up to a significant portion, so ensure you’ve accurate expense projections.
If you work with a managed IT services provider, expect to pay a monthly fee for security services and system maintenance. If you’ve an in-house team, include in your budget the wages for your technicians and the cost of conducting any training they may require.
Get a risk assessment
It’s crucial to identify potential risks to your data and systems if you want to create the most realistic budget. IT risks include spam and ransomware attacks, software and hardware failure, human error, and natural disasters. You can perform a risk assessment internally or hire a third party to conduct it to help you plan for these emergencies.
Once you’ve collected data about all the potential risks that could damage your enterprise, you can perform a risk analysis to establish the probability of any of these events happening, so that you prepare and budget accordingly.
Determine your IT needs
To do this effectively, send out a survey to your employees to find out the types of IT they need to be efficient and productive in their roles. Ask them the equipment they use the most, those they think should be omitted or scaled down completely, plus the ones they can’t perform their duties without.
Evaluate the needs of your company and then decide whether it makes more sense to run your business efficiently by outsourcing IT support to a managed services provider or keeping an internal IT department.
Create an IT budget that works for you
If you need help creating a realistic IT budget, NetworkTigers can analyze your business needs and develop one that’s tailored to your needs. Contact us today to find out how we can customize our IT solutions to suit your company’s needs.