How to determine your company’s IT budget

etablir-budget-informatique

IT budgets vary greatly depending on the industry.

That being said, most companies are investing more and more resources in their IT infrastructure because it has become a vital aspect of their operations and growth.

A company’s IT budget has a direct impact on its performance. That’s why it’s important to make the right decisions when it comes to determining how much to invest in IT equipment and services.

In this article, find out how to determine your company’s IT budget, with examples and explanations from our IT outsourcing specialists.

IT budget: IT spending varies by industry

For some industries, reliance on IT tools has increased dramatically over the past few decades. For example, finance, accounting and telecommunications have all experienced a major digital transformation. These are the types of industries that now spend the most on IT.

Companies in these sectors have little choice but to invest more of their revenue in their IT department.

Here is a table to give you an idea of the percentage of revenue companies in different industries are investing in IT (the examples given are an approximation).

Industry % of revenue invested in IT
Finance 9%
Telecommunications 5.5%
Consulting and services, IT 4.5%
Insurance, electronics, healthcare, transportation 3.5%
Automotive, consumer goods, chemicals, energy 2%
Construction, distribution 1%

 

Breakdown of IT spending

As you can see, banks generally spend much more on IT services than manufacturing or construction companies do.

However, determining a company’s IT budget isn’t just a question of figuring out how much to spend in total. It also involves deciding how to allocate the funds most effectively.

Several factors such as the state of your equipment (computers, servers, software, etc.) and your strategic objectives (automating tasks, enabling work from home, transitioning to cloud computing, etc.) should be taken into account in order to invest the right amounts in the right places.

Here are the different types of expenses that can be included in an IT budget and a typical example of how the funds may be allocated:

Types of expenses % of the IT budget
IT infrastructure

(Equipment, hosting, etc.)

34%
Staff

(Internal, external, etc.)

31%
Software

(Acquisition, subscriptions, etc.)

20%
Other 15%

 

Pitfalls to avoid when developing an IT budget

The number one pitfall to avoid when developing an IT budget is the temptation to save money by underspending on equipment or technical support. This impulse can actually cost more in the long term.

For example, inexpensive computers can have a multitude of problems such as short lifespans, limited warranties, and incompatibility with certain operating systems. When all of this is considered, they may end up costing more than you think.

Even if you invest in top-quality equipment, you will need experienced people to manage your IT infrastructure in order to get the most out of it. These professionals take care of security and technical updates, fix problems, configure systems, manage users and set up online backups. Technical support is an essential aspect of IT that must not be neglected!

Groupe SL can help you determine your IT budget

Determining a company’s IT budget is not to be taken lightly. Professionals who have in-depth knowledge of business computing, such as our strategic IT services specialists, can help you make the right decisions.

Group SL can help you implement an IT strategy that will support your business development and be a real asset to your organization. Contact us today!

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