TIME TO READ: 5 MINUTES
Ten years ago, we published an article on setting a reasonable IT budget for the coming year. The entire world, let alone the IT world, has changed phenomenally since then.
Now we have clouds talking to clouds, AI running websites, cyberattacks raging across the globe…it's a totally different landscape!
It's time to revise our advice on IT budgets. The good news: technology has become more affordable over time. Done right, a solid IT budget will provide the necessary items without breaking the bank.
5 Trends to Watch in 2022
What's coming next year for the IT side of business? These trends will influence everyone's budget.
- Growing Digitization. Pandemic-related changes will continue their spread. This includes expansion of remote work, virtual reality (VR) technology adopted in business, and an ever-increasing need for data storage & security.
- Cyberattack Monsters at the Door. Year on year, cyberattacks keep getting exponentially worse. More complex, farther reaching, hitting more organizations of every size. Any organization not defending against these attacks risks their
ability to stay in business!
- Everything-as-a-Service. It's not just software now. Storage, servers, infrastructure, even a whole operations platform…you can add all of these as an online service. (FYI, you can get IT services with this model as well.
It's called "Managed IT Services." Here's our page on it.)
- Video Channels Always Open. While we don't recommend using Zoom for security reasons, video platforms like Teams have become essential for remote team communications. Many companies will upgrade to paid video conferencing services,
if they haven't already. More connections, better quality. You may even want to deploy a video conferencing server within your network.
- Clouds Evolving for Remote Work Safety. As the cloud adapts to business, it has gained the ability to spread computing across several locations (called "Distributed Cloud"). Distributed Clouds often come into play as a company switches
to a remote or hybrid work model. It provides an insulating layer of protection for internal and remote employees, by sharpening the "edge" (the part of the cloud which watches connections from outside your network).
How Much Should You Spend Per Employee in 2022?
Let's say we have a 100-person organization. This organization now operates on a hybrid model—balancing in-office and remote work.
How much should they budget out for each employee's IT needs?
First, we split the expenses into two parts:
- RECURRING EXPENSES – Incurred every year, per employee
- PROJECT-RELATED EXPENSES – Organization-wide expense, usually incurred every 1-3 years
Recurring expenses include:
- Employee PC maintenance and rotation
- Software licenses & subscriptions
- IT team salaries to support the employee
- Website & Cloud hosting
- Network support
- Server & desktop monitoring and security
- Communication lines (often overlooked)
- Remote work-enabling tools (headsets, cameras, ergonomic components, etc.)
- Cloud backups for servers and workstations
- Cyber risk insurance
Divided out across the organization, you’d want to budget an average of $3,000 to $7,000 per employee for these expenses. Smaller organizations can lean toward the low end; bigger ones, the high end.
This estimate comes from CIO surveys, spending trends, and our own customer data. Sources at the end of the article.
What about project-related expenses? These can include items like:
- Major software purchases / SaaS subscriptions
- Buying new IT hardware to replace end-of-life machines
- Consultant billing (varies by month, unless you set up an SLA)
- Cybersecurity training classes for employees
- Cloud voice/VoIP system implementation
- Server software licenses (sometimes on multi-year renewal cycles)
- Network hardware replacements/upgrades
- Website and application development
- Network implementations
That's a lot of potential expense to consider. Something for which you definitely need to budget!
Pro Tip: In 2022, all IT hardware purchases will cost more, and take longer to arrive. Order well in advance for your upcoming hardware needs.
How to Work Out the IT Budget (Next Year and Every Year)
Industry averages on IT expenses range from 2.5% to 5% of annual revenue. This is still a good measuring stick to use for 2022.
When planning your budget, use these questions to help guide you.
- What will you do to improve your company’s cybersecurity in 2022?
- What communications services do you use now? Do they satisfy your team's needs? If not, what more do they need?
- Does a remote worker have the same level of network access and security as an on-site worker? If not, what could you do to make them the same?
Next, look back over your 2019 and 2021 expenses. Leave 2020 out (for obvious reasons). Take the average of the two years, and use the resulting budget numbers as a baseline for 2022.
Lastly, if you foresee project-related expenses, budget an extra 2-4% of revenue for them across the next 3 years.
(If you don't foresee project-related expenses, budget 2% of revenue anyway, in case of emergency failures or cyberattack.)
Depending on the size and complexity of your company (including remote workers' locations), it can take weeks to plan budgets on your own. You'll have to review the current budget, identify where & when it's changed in recent years, tabulate the recurring
expenses, determine IT pain points that need to be addressed next year, talk to HR about hiring projections, talk to your company leadership to find out what’s in store for your company in 2022, and devise an IT strategy to support it all.
Someone who has experience preparing IT budgets can help you save a lot of time and provide a valuable second opinion on your IT plans. Senior IT Consultants can take as little as 10-20 hours to come in & help you create a 3-year budget. They locate
all of your recurring expenses, suggest areas for cost savings, and give valuable feedback on projects to consider.
With all the factors discussed here, it pays for itself.
We hope this information helps with your IT budget planning for next year!
Start 2022 off right—make sure no one can break in! Contact us at firstname.lastname@example.org to schedule a network security check.