When it comes to IT budgeting, the question is not just about spending more or less—it’s about spending wisely. Organizations often underestimate the full scope of IT costs, focusing on line items like hardware and software while overlooking the value IT delivers when aligned with business goals. Paying the right price for high-value IT can move your business forward, while underspending or misallocating resources can introduce risk and stagnation.
According to Gartner data, the average IT spend is approximately $1,221 per end user annually, or $891 per device. Most employees today operate multiple connected devices, making these costs inevitable. This budget typically covers:
Hardware lifecycle, from purchase to disposal
Software licensing
Managed IT services
Collaboration tools and cybersecurity platforms
Cloud-based subscriptions and compliance tools
For regulated industries, such as healthcare, financial services, and government contracting, IT costs can be higher due to strict compliance requirements.
Effective IT budgeting aligns with hardware refresh cycles. Recommended timelines include:
Desktops and laptops: 3–5 years
Servers: 3–5 years (accelerated due to higher processing demands)
Mobile devices: 2–3 years
Failing to refresh hardware can lead to performance degradation, compatibility issues, and security vulnerabilities. Ensuring devices are current prevents disruption and protects against cyberattacks.
Outdated infrastructure is a prime target for cyberattacks. Keeping systems updated with security patches and firmware is essential for safeguarding endpoints, servers, firewalls, and switches. Organizations in regulated industries must also meet compliance standards like CMMC, which can elevate IT costs but are crucial for operational integrity.
Businesses can optimize IT spending with either fully managed or co-managed IT services. Fully managed services are ideal for SMBs looking to outsource all IT functions, while co-managed services supplement internal teams to cover help desk overflow, specialized projects, or 24/7 monitoring. Identifying gaps in IT coverage ensures resources are invested where they deliver the most value.
Rough Order of Magnitude pricing provides a practical framework for annual IT planning. ROM estimates consider historical costs, inflation, and project scope, allowing organizations to:
Secure stakeholder approval
Prioritize investments
Phase initiatives using a crawl, walk, run approach
High-value IT does more than support operations—it drives business growth. Strategic roadmaps help organizations:
Visualize spend over 1–3 years
Phase out end-of-life hardware
Align technology investments with broader company initiatives
IT should be evaluated not merely as an expense but as a critical enabler of business success.
Q1: How can I determine if my IT budget is appropriate?
A: Compare your per-user or per-device spending against industry benchmarks, consider hardware refresh cycles, and evaluate whether IT investments align with strategic business goals.
Q2: Should I outsource IT or keep it in-house?
A: It depends on your organization’s size, internal expertise, and growth plans. Fully managed services are ideal for SMBs seeking comprehensive support, while co-managed services can augment internal teams.
Q3: What are the hidden costs of underinvesting in IT?
A: Risks include performance degradation, security vulnerabilities, missed compliance requirements, and lost productivity. Strategic investment reduces these hidden costs.
Q4: How do I prioritize IT spending?
A: Use a Rough Order of Magnitude (ROM) approach to estimate project costs, prioritize high-value initiatives, and phase upgrades to align with business objectives.
Q5: How often should hardware be refreshed?
A: Desktops and laptops: every 3–5 years, servers: every 3–5 years, mobile devices: every 2–3 years. Refreshing on schedule helps maintain performance, security, and compatibility.