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Posted by Stefanie | April 22, 2016

IT by the numbers: How to plan the best budget for your business

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Every company needs to consider their technology costs as part of your budget planning.  Your IT needs are an important part of the foundation to any business. To control fixed costs, deploy the right technology and establish future IT plans, you will have need to have the funds to execute those and an appropriate budget to back up that plan.

Your IT budget needs to account for three major cost areas: hardware, software and support.

Hardware

What exactly falls under the hardware category? This part of your budget it going to cover all of your network gear, desktop hardware, printers and copiers, etc. This includes (but is not limited to):

  • Firewalls
  • Routers
  • Switches
  • Wireless Internet set up
  • Computers
  • Monitors
  • Projectors

Pro tip- The average useful life of most hardware is no more than 5 years. If you want to ensure that all hardware is replaced over a 5 year span, budget to replace 20% of all of your hardware per year. That way, at the end of every 5 year cycle, all hardware will have been updated!

Software

 Your software costs are going to cover the line-of-business applications and the programs and subscriptions used by your employees.  Additional services such as voice and data communications (internet and phones) can be added to this category as well.  A lot of these costs will be fixed and recurring software costs. For example:

  • Security protection (anti-virus, anti-malware, anti-spam programs)
  • Desktop applications (Microsoft Office, Adobe)
  • CRM
  • Accounting (Quickbooks)
  • ERP

An important point to remember is that software is bigger than just straight computer-related costs. This category should also include things such as your wireless service, and your phone system, VoIP or otherwise.

Support

When you have a growing number of users in your company, and an increasing amount of hardware and software to manage, it’s essential to have a robust support system for set up, upgrades, troubleshooting and vendor management.  There are two support options for businesses: building an in-house IT staff or hiring a third party service provider. You can find more information about which provider type is best for your business here.

The numbers

We took a sample of 4 MyITpros clients with between 30 and 50 users (our average-sized small business client). We looked at their total annual spend over 2015 for hardware, software and support.

To successfully plan your budget as your company grows, you should combine the per user average for each of the major three sections outline above. Our sample group’s average annual cost per user is as follows:

  Average Per User Cost
Hardware $1,000
Software $1,300
Support $1,500
Total Cost Per user $3,800

We recommend a budget range of $3,500 - $4,500 per user for an average-sized small business.

Pro tip- Not all budgetary sections are created equal. For example, if you’re a manufacturing company, your hardware costs will probably be higher than the average business, and you should plan accordingly. It’s important to understand your own business needs and make sure you have extra funds allocated in the right place.

 Planning your IT budget can seem like an overwhelming task, but with a simplified approach, thorough understanding of your business needs and some real time data, you will have all the tools needed to make a solid budget.

The purpose of this blog is to answer the questions you ask! Our IT by the numbers series continues next week with an in-depth look at in-house IT support costs versus third party managed services costs. For more information on budgeting for IT, check out some of our related posts!

Tags » Budgeting for IT