How Small Businesses Should Budget For IT Expenses
One of the most common business short falls we find when engaging with new clients is that they have never properly budgeted for their IT&T expenses. In the best cases they know what they will be paying for IT support as they have some form of fixed price agreement. In the worst cases they have just been paying for everything as and when it arises.
There are a lot of variables that determine how SMB’s should budget, so I can’t provide a “one-size-fits-all,” simple answer. However, below are some general guidelines that should help you figure what costs will be incurred and how to ensure you can budget for them.
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 support as well as having a huge impact on productivity. Therefore, your budget should include an IT refresh of all equipment every 3 to 4 years to be on the safe side.
Maintenance. There is no “set it and forget it” when it comes to network maintenance. Just like a car, if you don’t maintain it, it breaks!
A good general rule of thumb is to budget $300 per month for each server and $100 per month per PC. That cost doesn’t just cover support of those specific pieces of equipment, it should cover all IT related equipment and applications within your entire environment, printers, routers, switches, firewalls, all your licensing renewal management and management of all your third party vendors such as your ISP, Accounting software and CRM in other words everything required to support and maintain the entire IT environment. That would also include the costs of installing and configuring new equipment or upgrading applications etc.
Data Backup & Disaster Recover. Another expense you must account for is backing up your data to an off-site location. 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). As an example we utilise an onsite / offsite Back up and disaster recovery system, that backs up all data hourly to a local device and then overnight to an offsite storage system. This provides both Back up and DR as the local device can be booted up as a virtual server in the event of a server hardware failure. The cost of this is $225 per month and covers up to three servers and 500GB of initial storage.
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.
Creating Your Budget. If you outsource your IT&T requirements to a Managed Service Provider they most certainly should be doing this for you on an on-going basis. We find for most SMB”s (10 to 75 Seats) a six monthly technology plan and review is suitable. This is not a complex process; in essence it should cover all the points mentioned and clearly map and cost requirements for coming six months. It’s then a simple task to review the previous six months, and plan the next 6 months so you can budget accordingly based your business requirements