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How Much Should I Spend on IT?

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If you’re a business owner, chances are that at some point you’ve asked yourself, “How much should I spend on technology?” Beyond the hardware, there’s a dizzying number of security solutions, and a successful security profile will always involve some combination of products and tactics.

To further confuse things, different managed services providers (MSPs) will inevitably prescribe different solutions. That doesn’t make one or the other right or wrong – there are multiple paths to a solid security profile – but it does make it hard to comparison-shop.

So back to the original question: Is there some kind of benchmark for the percentage of revenues a business should devote to IT? It turns out there is, thanks to a study conducted by consulting firm Deloitte and published in the Wall Street Journal. The study looks at industries by sector, with corresponding IT budgets.

As you might expect given the higher security stakes, banking and securities organizations top the list, spending just over 7% of revenues on technology. Business and professional services (a broad category to be sure) and education/nonprofit come in next at just below 6%.

The middle of the pack, ranging from 4.39% down to 2.5%, includes travel/media/hospitality; technology/communication; insurance; health care services; and energy and resources.

And spending roughly 2% or less of revenues on tech are consumer/retail; manufacturing; and construction. The average for businesses across all industries is 3.28%.

One very important note is that the survey predates the pandemic, which has forced many businesses to implement new technology to allow staff to work remotely, and has also been a field day for phishers, hackers and other purveyors of malware. We would be very surprised if those percentages don’t show an increase in 2020.

It might help to have these numbers to use as a benchmark, but in the end your business is unique, as are the security solutions that are appropriate for you. Make sure you understand what each component is intended to do, and check references so you have a comfort level with the MSP you choose.

Questions about budgeting for IT and security? Contact Hill Tech Solutions.

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