Companies in every industry, regardless of size, are often challenged by the dilemma of an IT budget. It doesn’t matter if you are a sole proprietorship, a small non-profit, or a significant manufacturing operation. There is often a disconnect between the IT resources needed to stay competitive and secure and the budget allowed for these purposes. Part of the problem is that technology evolves rapidly, and companies need to keep up to keep their client base – but the budget established eight months ago doesn’t address the new needs. In 2022, budgeting for technology must be an ongoing topic of discussion because procuring needed technology is not a luxury. It is a necessity.
The good news is that when it comes to technology budgeting, organizations across the board are more willing than ever before to explore real-life solutions for overloaded and understaffed IT departments. As executives better understand the need for technology advancements and innovation, they are more likely to do what is needed to fund these items.
Experts Say: Companies should expect to allocate between 4 and 8% of the overall budget towards IT.
Develop an IT Budget for Critical Work Functions
Companies must always budget for the various devices required for critical work functions, such as computers, tablets, smartphones, and printers. These are easy items to understand and fund. The backend systems, growing networks, and emerging technologies consume most of the budget and can be more unpredictable and challenging to plan for. Companies of all sizes have had to reconsider their IT budget strategy regarding technology. Organizations have migrated away from owning and maintaining physical technology to paying for shared technology, managed services, and virtualized services.
Organizations are turning into consumers of technology rather than owner/operators. Traditional IT budgeting included assessing which technology to purchase and have the resources to install and operate that equipment. Cloud computing and software have changed the game, and companies who buy into the innovation no longer have to set aside funds for purchasing and housing technology. Many times, the budgeting strategy has been reduced to researching where companies can procure equipment on a subscription basis through managed services.
Over the past several years, the cost involved in securing the latest technology has come down considerably and is within reach for many SMBs. Cloud computing technology has enabled many companies to use advanced systems to maximize efficiency and reduce costs. The barrier to entry for much of the latest technology is significantly lower than in the past. However, another problem needs to be solved – with new technology tools, functions like data center hosting, customer service desks, email management, and user training become necessary. Many SMBs do not have the resources to handle these roles and are turning to managed services organizations to achieve economies of scale and shared cost benefits.
A lot is changing in the IT world, but one aspect hasn’t changed – approximately 5-8% of your annual budget should be set aside for IT and technology costs. At this point in time, every organization should understand the vital role that technology – and staying up to date with technology innovations – plays within the company. The near future will likely be transformational for SMBs, with evolutionary technological shifts every day. While budgeting for technology may be developing, the impact of this technology remains as crucial as ever.
Alliance IT is a professional managed services firm based in Sarasota, Florida.
