What Should Your Business Spend on Information Technology (IT)?

Today technology is not just a business enabler. It’s a competitive differentiator. Big brands like Amazon, Uber and Netflix got there by disrupting traditional business models with tech. And all were once small start-ups.

Even if your sights are not on global market domination, it’s important to make sure you’re at least keeping up with peers in terms of IT spending, if not seeking ways to gain an advantage through technology. Just look what’s happening right now in grocery, which has struggled for years to get in-store pickup and home delivery right. Amazon’s purchase of Whole Foods is the latest indicator that supermarkets are about to be outdone by an outsider’s investment in a better, digitally enabled experience for customers.

Customers often ask us what they SHOULD be spending on IT. Here is some helpful data:

• US IT budgets (operational, capital and spending outside of IT) average 2.3% of revenue across industries and company sizes, according to Computer Economics. Budgets have remained pretty flat year to year.
• Companies of less than $5 million in revenue increased budgets an average 2.1% for 2017.
• Spiceworks breaks its spending plans down by the number of seats in this chart.
• If you’re in healthcare, Gartner provides a lot of detail on industry budgets in this sample analysis.
• Spending varies considerably by size and industry. Here is what CompTIA found:

(see below chart in this report on page:  Appendix I)

But what companies spend is different than what they should be spending.

More than half (52%) call their budgets somewhat or very inadequate in the Computer Economics study.

Fully 40% of CompTIA respondents feel their IT spending is too low, with slightly more feeling spending is about right.

Customer experience, followed by worker productivity, are SMB’s top IT spending priorities, according to CompTIA.

Benchmarking your IT spend compared to peers is a valuable exercise to make sure you’re not falling behind. Industry associations can be great resources on what companies spend in specific market sectors.

Check out this link for tips on setting and communicating about your IT budget. And this tool helps you track your spending to help prepare next year’s budget.

Getting a quote out faster, providing rock-solid IT reliability, delivering a better self-service user experience – all are ways tech investments translate into business advantage. Every day, IT investments become increasingly important to the business model, no matter the industry. IT solution providers like NJ based Exigent can be great resources in ensuring small- and mid-size companies are staying current on IT.

Contact us at 877-394-4368 for Small and Mid-Size Business IT Services