Technology is a critical factor in every business, and with each passing year, it only becomes more important. Your business likely uses an array of technologies to function, and that means that any problems with the tech can be heavily damaging to you and your business. That’s why technology services like IT and managed IT service providers (MSPs) are so critical. 

One question many businesses have before hiring an MSP is: “How do you decide on an IT budget?”

 Many businesses are unsure of what an appropriate IT budget looks like, and don’t know how to put that budget to the best possible use. We’ve created this comprehensive guide to help you decide on a budget that works for your business.

Deciding What You Need From Your IT Provider

Every business has different wants and needs for their IT services. It’s important to decide what’s most useful to you and what isn’t as necessary to make sure you have exactly what you need. Paying for services you don’t use or having to constantly add on services you need regularly wastes valuable resources. Look for companies that will offer you customized solutions rather than “one-size-fits-all” packages. 

Generally, businesses want their IT manager to secure data and information, minimize downtime, and maximize efficiency. This usually requires services like network security and cloud services. Every business is different, so choose what works for you.

Deciding on an IT Budget

Average IT Spending

What percentage of revenue does the average business spend on IT services per year? In 2020, the average spending was 8.2% across all industries, with 56% of organizations expecting to increase IT spending this year. However, there are plenty of factors that play into making an IT budget, like the size of your business, the size and configuration of your network, and the number of employees you have. It’s good to look at averages, but be sure to dig deeper with your preferred IT provider to learn what will be best for you.

Your Industry Matters

One factor that can seriously impact your IT budget is the industry or sector. Some industries are less technology-driven than others, and won’t need to put as much into IT and MSP services. For example, the software industry used an average of 24.7% of its revenue for IT in 2020. Meanwhile, a construction company won’t need to put as much of their revenue towards IT. 

Some industries have specific considerations and will need to account for extra security measures and emergency services in their budgets. Here are a few industries that will need highly specific services:

Law Firms

Managed IT services for law firms can be heavily beneficial. A law firm must have legal case management software that maximizes efficiency, so no time is taken from its clients. Law firms also need resilient cybersecurity to protect sensitive information.

Insurance Agencies

Insurance agencies need streamlined processes in order to minimize distractions and keep you focused on clients. Having advanced hardware and software is key to reducing errors and IT issues.

Financial Services Firms

Data security is crucial in the financial services sector, especially when it comes to techniques and programs that prevent theft and other forms of cybercrime. If information is lost or compromised, you also need to consider disaster recovery, from securing your network after a cyber incident to managing public relations. 

Manufacturing Companies

Major technological advances have changed the way manufacturers do business. Now, most manufacturing companies are partly reliant on IT services, but finding the balance between automation and human labour is challenging. IT can be used to streamline communication and improve the visibility of supply chains.

Any IT Budget Can Be Effective

The way you use your IT budget is often more important than how large or small that budget is. Any budget is better than none at all, so don’t be afraid to start small and let your IT services grow alongside your business.

Find a Managed Service Provider You Can Trust

When choosing an MSP, you want a company that’s effective, reliable, and trustworthy. Alt-Tech is dedicated to offering streamlined and secured IT services. We understand the importance of keeping your business running smoothly because we’re a business just like yours. Contact us today to find out how we can make your technology work harder for you.