Top 5 Reasons Every Business Should Maintain a Healthy IT Budget

Budgeting holds strategic value but some business owners may run their company in a casual manner, not seeing the value in budgeting. If you are planning for your business’ future, you will want to ensure your plan is financially viable.

Budgeting is the most effective way to control cashflow while allowing investment into new opportunities at the appropriate time. Information Technology (IT) budgeting is the process of allocating finances to the different technology aspects of your business. When done properly, IT budgeting will aid in cash flow management for your business and highlight where savings can be made.

Without technology, most companies today cannot remain competitive in the marketplace. Technology is omnipresent in the business world and covers a wide range of potential costs to your business.

Some examples of costs you would see in an IT budget are:

  • Computers & Servers
  • Networking Hardware
  • Internet, Data Connectivity, & Edge Security
  • Telephones & Mobile Phones
  • Websites, Intranets, & Communication Platforms
  • Line of Business Applications
  • Backup Solutions & Disaster Recovery Plans
  • IT Employees & Outsourcing
  • IT Managed Services
  • And much more

The Top 5 Reasons

Here are the reasons why every business should maintain a healthy IT budget:

  1. Investing In Your Business A proper IT budget is an investment in your business’ success, not just a cost to the bottom line. Many businesses look at IT as a drain to cash flow. As a result, it often does not get budgeted for and becomes a series of ad-hoc expenses that over time will cost much more money than if you had invested in an IT strategic plan. By ensuring your business has the right tools for the right people, you will be able to minimize efforts and reduce frustrations within the organization.
  2. It Affects Everyone Your IT budget affects everyone in your business, from management to front line workers. Having the wrong tools in the hands of your employees can often be more detrimental than not having a tool at all. In either case, the lack of proper tools and resources is a source of employee dissatisfaction which can result in high turnover. Technology, when properly planned for and evaluated, can make day-to-day tasks simpler and remove the burden of repetition, manual interventions, and allow employees to focus on revenue generating tasks.
  3. Strategy Over Cost Your business’ IT strategic plan should drive your budget, not the other way around. That does not mean IT has a blank cheque to spend, but rather these two should be done in combination to align the IT budget with the strategy. Remember your IT budget is not just about figuring out costs; it helps ensure that you plan for the right resources and utilise them efficiently. It is important to ensure you are also investing in the ‘right kind’ of resources. For example, purchasing consumer grade equipment seems like a less expensive solution; however, these products are not designed in the same way as business grade products and typically will cost a business much more over their lifetime.
  4. Spreading Costs Over Time When it comes to your IT strategic plan, maintaining a three-to-five-year high level IT budget will aid in determining what your business can afford over time. Additionally, fully phased replacement cycles for servers, computers, and other hardware will help in spreading costs out, keeping security tight, and minimizing failures. Another strategy for spreading costs over the long-term budget is looking at leasing options to change capital expenditures into operating costs. Without an IT budget in place, these cash flow strategies are difficult to realize.
  5. Increase Profits & Reduce Costs Invest in technology that improves profits and grows revenue. Ensure these resources are based on modern technologies and work well with your three-to-five-year IT strategic plan. Budgeting can also help in identifying high-cost tools which may be able to be replaced with better, less expensive options on the market (don’t forget to budget for the cost of changing the tools).


Remember, IT spending is an investment in your business’ success, but maintaining a healthy budget has a strategy behind it. One way to ensure you are spending an appropriate amount on IT is to use a percentage of revenue as a guideline. For example, in 2019 Computer Economics reported that the average percentage of revenue spent on IT within retail sectors was 1.2%-3.0%, whereas within financial services spending was 4.4%-11.4%. Now that is not to say that you must fall within those values, but it does give you a useful benchmark for companies that are growing and remaining profitable while spending on invaluable technology resources.

In the end, do not be afraid to spend on technology for your business.

Originally posted by Chad Ross on as Top 5 Reasons Every Business Should Maintain a Healthy IT Budget

Hi, I’m chad

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