Things to know about your IT Budget process?


I think most business owners can agree that 2020 has been a year of surprises impacting their IT Budget.

Reevaluating your IT budget for 2021

Looking forward to 2021, how are you planning for your IT needs? 2020 taught us a valuable lesson when it comes to investing in your IT infrastructure. Not being able to respond to the remote working demands quickly, many companies struggled and lost productivity. Does this mean you should have 1000’s of dollars squirreled away for an emergency? Probably not. But having a good understanding of your current IT hardware/software may help make a more educated decision when it comes to your company’s agility to respond to workforce environments.  

Questions to consider when developing your IT budget.

  • Do you have a good understanding of your IT environment? Do your computers have cameras? 
  • Are you working from desktops or laptops? 
  • How old are your computers and servers? If they are 3-4 years old or older, it may be time to replace them. 
  • Are you using up-to-date software? 
  • What percentage of your employees work remotely? 
  • After COVID-19, are you going to continue to allow employees to work remotely?

So, what’s reasonable to earmark for IT when creating your budget? The average percentage of revenue designated for a business’ IT budget in 2020 was approximately 8.2% which is up from previous years. Software and tech companies had the highest percentage of spending at 25% and 16% of revenue.

IT budget, as a percentage of revenue by industry

Flexara compiled a pretty comprehensive analysis of what various companies budget for IT services based on industry. The data is a good starting point for defining what a company should invest in their IT infrastructure. 

2020 Graph depicting the percentage of revenue earmarked for IT services by industry.

How do I estimate how much to spend on my IT budget?

Here is a simple equation to determine your estimated IT budget.

The number of devices managed X 25 hours (the amount of time estimated to service a device over a year) X $200 = Your base IT budget.

Here’s an example for a smaller business with ten employees.

10 computers and 1 server (11 devices) X 25 (275 annual hours of support) X $100 = $27,500

If you plan on utilizing cloud-based storage or other networks to store and back up data, your annual IT budget will likely be more.  

Although this is a loose estimate, it does give you an idea of how much Managed IT can cost. 

We strongly recommend taking advantage of our free consultation to determine your company’s specific IT needs. Once we assess your needs, we can provide an accurate estimate.

In-house vs. Contracted IT or a combination of both?

Having an in-house technician is very convenient. However, it can be limiting — and expensive. Given the average IT specialist in Louisville, KY, earns around $40,000 per year. This usually doesn’t include insurance, benefits, the cost to hire and train new employees, and to continue to pay competitive salaries to retain them once they gain experience. In-house technicians are also full-time, meaning limited to a 40-hour workweek. 

On the other hand, a managed IT service provides around-the-clock support with technicians that are up to date on current technology. With managed IT you have the coverage you need when you need it without paying benefits or for idle time.

In the case where you have in-house IT support but may need some additional help, a managed IT service may be a good solution to fill in any unplanned gaps in coverage, or the added expertise you need to implement larger, more sophisticated network infrastructure projects.

Next steps

Whether you are looking for a full-service Managed IT solution, occasional support, or help with installing software and systems, it starts with a call to Bit Perfection to schedule a free, no-obligation consultation. Our consultant can help assess your current IT environment and identify where you may need the most support and present you with a plan that is right for your business and budget.