How Much Should You Be Spending on IT? - HUB Blog

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How Much Should You Be Spending on IT?

How Much Should You Be Spending on IT?

It’s no secret that technology is a big part of today’s business, but how much money should your organization really expect to spend on your IT? Of course, you need to stay competitive, but can you justify dropping huge chunks of capital on solutions that may or may not come with a visible ROI, or that’s the total cost of ownership (TCO) is going to affect your ability to spend elsewhere? Today, we’ll talk about what technology your organization definitely needs, and go into the corresponding cost of that technology.

For modern business, having a centralized network is par for the course. On this network, you’ll find at the very least email, some sort of file database support, a security solution, and a backup system. You would also have some endpoints, whether they are workstations, laptops, or mobile devices. That’s about as bare-bones as any business could get. As the company grows, more has to be added. Some organizations have moved significant parts of their computing infrastructure offsite, either to the cloud or to a colocation center where they still have a good deal of control over the management of the infrastructure.

Besides servers and endpoints, there are plenty of pieces of technology the average business uses. There is the modem, and the routers, switches, printers, and more. Then there are other options that businesses often take advantage of such as security systems, digital signage, and other solutions that require additional hardware. All of which comes with an assigned cost.

The scaling of all this hardware doesn’t necessarily happen as the company grows. While some organizations may need a hosted VoIP system, for others it simply doesn't make any sense. This goes for CRM or ERP solutions, security systems, productivity software, cloud storage, and other software-based solutions. Since many cloud-based platforms are beginning to see higher degrees of utilization, a lot of companies are avoiding huge upfront costs associated with purchasing hardware by relying on these cloud systems, which are more attractive, but, whose TCO may actually be higher. By transferring the type of expense to a more recurring, operational expense, today’s businesses are able to accomplish more with less.

Additionally, most businesses today are beginning to utilize online marketing platforms, whether they be through a dedicated website, social media platforms, or other means. The cost of these strategies tends to be variable even though most organizations will adhere to a very fixed percentage of total revenue for a marketing budget.

How Small Business IT Deployment Stacks Up
As you might expect, the average small business spends a higher percentage of its revenue on IT than larger organizations. According to Gartner, most small businesses, which make up over 99 percent of surveyed companies, and nearly 83 percent of total IT dollars, will spend upward of six percent of their revenue on IT, while larger organizations typically spend around three percent of theirs. This means that smaller businesses are paying more of their available money to get the IT that larger organizations get. This can present problems if a core part of a small business’ IT infrastructure fails, or if there is a project that is mismanaged or fails to meet the expected return; a cost that many larger organizations can manage.

However, the market for IT seems very strong with one survey concluding that technology spending across small businesses has grown a whopping 4.8 percent over the past six years; and is expected to grow another five percent in 2018. The total small business IT investment in 2017 wrapped up at a cool $690 billion, with a lion's share of that spent on hardware, software, and virtualized hardware and software environments.

Larger businesses don’t pay quite as much per worker, but they are cognizant of technology innovation, especially with new solutions available that can reduce downtime, manage mounds of company data, and reduce management costs at the same time. Most larger businesses have already implemented a lot of the technological systems that smaller businesses struggle to implement, so they look to emerging technologies to help them gain an advantage. Technologies like artificial intelligence and blockchain are in their infancy but have been utilized to build security and analytics software that these large organizations are starting to incorporate. Time will tell if that emerging technology is as effective in practice as it is in theory.

Small Business Must-Haves
There are emerging technologies and then there are the technologies that every business has to have, and many still don’t. Here are three technologies every business needs to think about implementing immediately.

  • Security Suite: There are so many threats out there, and you saw the figures above, 99.7 percent of all businesses are small businesses. That means there is literally no business that is too small to be targeted by hackers. If you find yourself on the wrong end of some malware or a direct hack, you could not only be looking at some lost data, you could be looking at lost consumer confidence--the one thing that keeps you in business. By having at the very least an antivirus and a firewall on your business’ network, you can manage to keep a majority of threats out. To really ensure you aren’t in danger, we suggest an automated monitoring and management solution so that you can keep tabs on your network and your infrastructure. By keeping threats out, and downtime to a minimum, you should be able to focus on your business.
  • Backup and Recovery: So you may not have to meet a half dozen regulatory compliances, but one thing is for sure, your data is important. If you were to suffer a major data loss, there is a very good chance that your business would close in the next 12-to-18 months. That’s a fact. By having a dedicated plan to back up your organization’s data, and another to restore it if it is somehow lost or corrupted, you are potentially saving your business.
  • Cloud Storage: Again, your data is important, and sometimes you need access to it right now. With a secure cloud storage solution, you can have the data you need when you need it on any Internet-connected device. There are literally dozens of choices to make, and some of them are free and come with productivity software so that when you need to draft a letter or balance your budget, you’ll have the software you need to do it.

No matter how small your business is, technology can work to solve many of your operational and logistical problems. The IT professionals at Hub Technology Solutions can assess your business and find you the solutions you need to get the most out of your resources while protecting your digital assets. For more information, call us today at 204-772-8822 or 1-833-847-0725

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