Every size business needs an effective IT services plan to increase productivity, deliver reliability to customers, and more.
Effective IT services initiatives can help organizations with data management, cybersecurity issues, company monitoring, system upgrades, and other security factors.
With all of the different elements in the IT services lexicon, IT leaders at your organization must put together a budget that will work well with your company. Done right, an IT budget can streamline various processes within an organization by creating opportunities for automation and efficiency.
This article will prepare your company for IT spending by breaking down what a budget includes, different IT services you can use, and a helpful template to create your own IT budget.
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Table of Contents
What Goes Into an IT Services Budget?
An IT budget should include the total amount of IT spending for a company over a year.
Here is what should be included in your IT budget:
- Hardware: your company will likely need new equipment and servers to support your IT infrastructure over time. This includes network servers, mobile devices, laptops, and other pieces of equipment to support internal processes.
- Software: your company should include software as one of the budget items. This includes subscriptions, software licenses, and other contract-based programs that support IT needs.
- Ongoing expenses: your company should factor in ongoing expenses like maintenance, internal/external staffing, onboarding materials, and security controls.
- Project-specific expenses: depending on if your company wants to have a specialized IT project like building a new security portal, there will be specific project expenses like networking equipment that goes into that, which might not impact recurrent IT costs.
Not all companies need or require the same IT services - but it is important to factor in all of these elements within your IT costs.
Learn more about the world of IT services with Clutch's IT Services Glossary.
How to Create a Budget for IT Services Support
Building a budget for an ongoing process involves finalizing company goals, selecting key priorities, and then combining them to factor in specific costs.
Companies can create a strong IT services budget by following these steps:
- Roadmap your IT services needs
- Decide if you need outsourcing
- Take an inventory of your current equipment
- Establish priorities for IT operations
- Consider your competition’s budgeting process
- Think about future IT support
These steps will help your IT budget come together seamlessly.
1. Roadmap Your IT Services Needs
Before crafting your budget, plan out what IT initiatives your company needs to take on. A good way to start is reviewing any IT support-related tasks from the last year.
If you spent money on a new router last year, your business won’t need to do it again this year.
Businesses can also see where there are gaps in their current IT strategy to see if they can make progress on them during this year.
Types of IT Services
These are popular IT services that are used for businesses of all sizes:
- Cloud backup services
- Networking upgrades
- IT development
- Monitoring services
- Cybersecurity support
- Data center backup
- Disaster recovery help
- Remote support
- IT consulting
Along with selecting the IT services your organization needs, stakeholders must consider which type of partnership they want.
IT Support Models
There are two well-known IT support models:
- Break/Fix Model: an agreement that means a service provider that comes to fix things that break. This can be a retainer or issue-based agreement. The cost will also depend on the specific issue
- Managed IT Services: The most common IT model that involves customers paying a service provider a recurring fee to provide a variety of IT support and consulting work.
Select the IT support model that will benefit your company overall.
Deciding between in-house IT services and an MSP provider? Let us help you choose the right option for your needs.
2. Decide If You Need to Outsource
A big aspect of any technology spend is figuring out who will complete the work.
Should you focus all of the work on your current IT department or find an outside agency of IT professionals to get the job done?
Who Should You Hire for IT Service Support?
- Your IT department and CIO (Chief Information Officer) have an advantage when it comes to supporting your company’s IT infrastructure. Their team already knows how your company works internally and what business goals your company has. It is also cheaper to build up an IT team than to hire externally. But there can be an issue with bandwidth and expertise when focusing all the work on an in-house team.
- Hiring an IT team as an outsourcing partner can relieve any strain on existing IT resources. With them having your organization as a client, they can provide faster resolution to problems. An outsourced IT partner can be more expensive and provide their own support services, which will greatly impact budget planning.
There is no right answer, but depending on how dependent your company is on technology, it might help to have a small IT team in-house that leans on an outside agency for larger projects and support. Your internal team of IT professionals can focus on strategy and allocation, while your outsourced partner can provide the heavy lifting.
3. Take Inventory of Your Current Equipment
There will always be a time when you need to update your equipment.
Make a list of what your company currently has and how old the items are. Once you have a completed list, your IT team can use their discretion when it comes to upgrading the materials.
Here are some popular pieces of technology and their general timeline for upgrades:
- Servers - every 3-4 years
- Routers - every 4-5 years
- Mobile devices - about 2-3 years
- Computers - about 3-5 years
If you’ve found that it is time to upgrade your IT equipment, then it will be pertinent to include it in your IT budget planning.
Be sure to keep an open dialogue with employees that are frequently using the materials to get an idea of what’s working or what can be improved. It’s possible that their feedback can lead your company to choose a different model or system.
4. Establish Priorities
The whole goal of a budget is to access the right resources to execute your business strategy and goals. It is important to be clear on what you want to accomplish and how IT services can impact that overall goal.
IT managers will know firsthand what’s working well and what can be improved to streamline processes. They should collaborate with business owners to see how these priorities can factor into the year’s budget.
Performing an IT audit can benefit the selection progress to give an idea of what is actually needed.
It might make more sense to upgrade the team’s laptops to help with remote work over the entire networking system at this time. It is important to think critically about how priorities align with company goals.
5. Consider Your Competition’s Budgeting Process
To form your budget –and ensure that you’re not under or overspending– think about how your competitors use their money for IT services.
This is easier said than done, considering a lot of IT needs are internal and not shown to the public eye.
Do some research on how much businesses on your side are spending on IT services and how much they’re allocating for IT services as well - this can be done by contacting IT service providers that work with companies of your size.
Again, not every company has the same IT needs, so your team will require different expectations of their IT department.
In your budget, be sure to highlight differences while also working on universal IT support strategies that all companies need to run smoothly.
6. Think About the Future
In this coming year, your budget should cover all current expenses that your organization needs to invest in. Outside of this, it is important to think about the future.
Your business will continue to compete with others, combat online cyberthreats, and evolve.
Researching future needs can make it easier for your team to predict IT expenditures, which makes your budget for next year even easier to plan.
IT Services Budget Template
Now that your company knows what goes into building an IT services budget, it is time to create one that’s unique to your company.
Factors for Information Technology Cost
Several factors impact IT costs, including:
- The type of IT support model
- Size of your organization
- Software & infrastructure fees
- Ongoing service supports
- Level of service provider expertise
All of this information will help your organization think about what goes into your company’s IT strategy and budget.
Learn how much your project will cost with our IT services pricing guide.
Level Up Your IT Services Support
If your company doesn’t have a secure IT services plan or system, your organization is unprotected.
When creating an IT budget, all team members must be strategic about what IT initiatives are critical to your business's success.
To craft a comprehensive IT budget, consider all of your technical needs, where reductions can occur, and what your business can optimize internally.
Plan an IT services budget using our template to help your business get started.