A question that seems to come up a lot lately with clients, in some form or fashion, is “How should I properly budget for IT expenses?” While this is a great question, there are a lot of variables that determine the answer, so I can’t provide a “one-size-fits-all,” simple answer. However, below are some general guidelines that should help you figure this out:
- Hardware Refresh. No one likes the cost of a network upgrade, but it IS necessary approximately once every 3 to 4 years. PCs and servers older than that tend to run slow, crash frequently and generally become more expensive to fix and support than to replace. Therefore, your budget should include an IT refresh of all equipment every 3 years to be on the safe side.
- Maintenance. There is no “set it and forget it” when it comes to network maintenance. With cyber criminals becoming more sophisticated and aggressive, you MUST constantly monitor and update your network against cyber-attacks, malware, data loss, etc. A good general rule of thumb is <> per month for each server and <> per month per PC.
- Data Backup. Another expense you must account for is backing up your data to an offsite location (often called “cloud backup”). Since all businesses generate MORE data year after year, the backup will grow. Start by assessing the growth of your data over the last couple of years to uncover a trend. From there, forecast those additional expenses going forward at the same rate (don’t expect this to stay static year after year).
- Expansion. Another factor for your IT budget is upgrading software, line of business applications, CRM systems and accounting packages that can no longer support your growing company. As your company grows, systems, processes and data become more complex requiring more sophisticated (and often more expensive) software and systems. Make sure you are looking ahead year upon year to see this coming and to properly budget for it. There’s no “magic” formula for this because the timing and cost of your upgrade is unique to your company, situation and what you are trying to accomplish.