IT budgeting: How much should Australian businesses spend?

IT budgeting: How much should Australian businesses spend?

Businesses are adapting to an increasingly digital marketplace by investing in IT. According to analyst firm Gartner, Australian spending on IT products and services will reach up to $93 billion this year, and it’s easy to see why. Technology enables companies to work faster, communicate seamlessly, and sharpen their competitive edge.

However, the real challenge for companies is figuring out how much they should spend on groundbreaking tech.

How do you know if you’re paying enough for technology?

The first thing you should do is evaluate whether your company is spending too much or too little on IT. The average Australian small to medium-sized business (SMB) invests at least 6% of its total revenue on IT. Of course, this can vary from company to company, which is why it’s more effective to break down the cost of each component of an IT system.

IT budget breakdown

1. Infrastructure

There are a couple of options when setting up an IT infrastructure. You can deploy on-premise servers, but you’ll have to pay $2,000 for servers and $1,200 for server operating systems, and approximately $52,000 per year for an in-house technician. Or, better yet, you can opt for cloud services that bill you solely for the computing resources and apps you use. These only set you back a couple hundred dollars a month.

2. Networks

Internet plans, routers, and switches fall within network costs. If your company conducts most of its business online, opting for faster, more reliable data services is non-negotiable. A 40Mbps National Broadband Network (NBN) fibre plan for SMBs is usually $100 per month (and costs more for premium speed).

Business-grade routers will cost you over $300, but can accommodate dozens of wireless devices. Meanwhile, switches, which allow you to connect devices on a computer network, go for as low as $40.    

3. Workstations

The amount you spend on desktops and laptops depends on what you intend to do with them. Most low-end laptops start at around $400 and are perfect for remote employees who run standard business apps and browse the web. For high-performance computing involving analytics or video editing, you’ll need more powerful desktops that cost well over $1,000.

4. Communications

A communications budget usually requires $60 per office phone and $20-$100 per user per month for a full-featured Voice over Internet Protocol (VoIP) plan. These hardly make a dent in your IT budget when you work with the right VoIP provider.  

5. Applications

Software applications make up a third of incremental spending on IT every year, according to analysts. This means more Australian SMBs understand the importance of expanding their digital capabilities and streamlining their processes with cutting-edge tools.

Like most companies, your biggest software purchases will likely include: accounting, customer relationship management (CRM), and productivity applications (e.g., Word and Excel). To get the best value for your money, consider Dynamics 365, which has accounting and CRM capabilities, and only costs your business $267.50 per month. Office 365 is another smart purchase with a starting price of $6.90 per user per month for standard productivity apps.  

6. Security

Considering that cyberattacks are growing in frequency and potency, implementing a powerful security framework is vital. Some say that allocating 10% of your IT budget to cybersecurity is sufficient, but this isn’t a hard and fast rule. The amount you spend comes down to your company’s risk exposure, the perceived value of your IT assets, and the potential impacts of compromised systems.

With that in mind, every organisation must budget for the following:

7. IT support

Since hiring an in-house IT support team can be prohibitively expensive, it makes more sense to work with a managed service provider (MSP). That’s because they’re capable of fixing a wide array of issues and providing round-the-clock maintenance services for a fixed monthly fee. MSP contracts go for at least $250 per user per month.

This guide should you give a clear idea of how much money you should set aside for IT, but it’s not a foolproof plan. Some items may not apply to your business or you may have already invested in some of them. To avoid making costly mistakes, you should consult with Empower IT Solutions for all your IT planning needs. We’ll create a clear-cut strategy based on your company’s requirements and even provide the services and solutions you need. Call us today to get started.