How Much Should Your Company Spend on Managed IT Support?

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When it comes to technology, does your company spend money or invest it?

That may sound like a trick question, but it’s not.

CIO Magazine found that on average, small-to-medium sized businesses (with under $50 million in revenue) spend 6.9% of their annual budget on technology needs, while larger companies spend a little less.

That’s a fair chunk of change for sure, but businesses that are smart about where these dollars go can achieve greater benefits – even ROI – from their tech.

These investments can mean a lot of different things. You may be paying for upgrades and updates that keep your business running efficiently, or adopting new tools that will help your employees work better. It may also mean you’re protecting yourself from IT issues before they wreak havoc on your company’s productivity.

There are a lot of different directions to turn to when carving up your IT budget, and it’s not always easy to know which way to go. Here are some steps to help you create a solid, proactive plan.

Track Your Current Expenses

If you’re not doing anything to track how much you spend on technology, the first thing you should do is review your expenses. Figure out what you are spending on IT, category by category, before you determine what you should be spending—especially if you won’t be able to increase spending for another year or two.

Worried about business security? Get a free risk report without our technicians even setting foot in your office.

Don’t wait until the tax year is about to end to find out where you stand. We see businesses do this all the time, then they scramble to spend a bunch of money without proper planning. If you look at a surplus in your tech budget as an opportunity to address known issues and reinvest in your company’s future, you’ll be on track for success and save cash by avoiding a break-fix approach.

Once you have a clear picture of what you’re already spending on IT, you can start formulating an informed budget for the future.

Audit the Needs of Your Technology Users

If there were a magic formula for determining exactly where to put your money, we’d give it to you. But every company has different needs and different issues.

Knowing how many technology users you have and what they need to excel at their jobs will help you zero in on your unique formula. Gather the numbers: Who uses what kinds of tools? How long will they be using the current software? Is that software changing, and when?

Nail down the functional needs of each department, and make a list of the various software and hardware they use. Think about cloud-based options for your software, and keep in mind that you may not even need an in-house server. If you do need one, ensure its functionality is properly funded because if you have ten brand new computers powered by one outdated server, you won’t get the speed and performance you want out of your hardware.

It’s especially important to audit your needs when planning to migrate any kind of IT services, software, or hardware to keep things lean. An audit can be easily facilitated with an internal survey and a little research.

Quantify Your Email Usage

Many small businesses implement upgrades to their email system. This process should start with an assessment of how employees use email. How many people use it? Where and when do they need it? Do they use email on multiple devices?

Any upgrade that involves a significant investment of funds should first take the temperature of how the tech is used.

Get a Risk Assessment

Risk assessments can be performed on your own with the help of an online assessment guide, but more thorough risk assessments are often provided at no cost by a Managed Service Provider. This assessment entails identification of unknown holes that could sink your ship.

The professionals like Vermont managed IT services company Vermont Connections performing the assessment will give you a snapshot of your current IT standing that includes any glaring holes in security or technology that ought to jump the priority list. It will also include information about whether your firewall has any holes, whether all your services are properly activated, and whether you have spam holes or online vulnerabilities.

We recommend opting for an assessment provided by professionals whenever possible because most of the information they’ll gather isn’t typically accessible by employees.

Create an IT Budget

By this point, you’re probably thinking, “Show me the numbers. Exactly how much should I spend, and where?”

One Vermont small business’ technology spending profile breaks down like this:

  • Phone Server Management & Support 8.29%
  • Network Firewall / Anti-Virus / Security 15.65%
  • Backup & Disaster Recovery 22.08%
  • Mobile Device Management & Security (Phones, Tablets, Laptops) 7.53%
  • Windows Server Management & Support 24.78%
  • Cloud-Based Wireless (with Guest Networking) 2.17%
  • Office 365 (Hosted Email & Application Licenses) 19.50%

Again, no two company’s needs are the same. CIO Magazine’s 2016 study notes that IT spending trends are focusing on improvements in customer experience, increasing operational efficiency, and boosting cybersecurity protection.

If you’ve gathered data on your current spending, identified upcoming problems through a risk assessment, and gotten a handle on exactly what your departmental needs are and how those needs might be changing in the next couple of years, you’re more than ready to put together a budget with real numbers. With a clear picture of where you stand today, and ideas about where you want to go tomorrow, you can invest wisely in your company’s IT.

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