Decision guide
How to plan an IT budget for a growing business
Most IT budgets fail in the same two places: hardware refresh, which is treated as a surprise every three to four years, and licence drift, which grows quietly as staff join and nobody removes leavers. Fix those two and the rest of the plan becomes predictable.
What is actually being compared
- Reactive budgeting
- Spend when something breaks or someone asks. No forward plan.
- Planned budgeting
- A rolling view of refresh, licensing, projects and contingency.
Side by side
How they differ in practice
| Feature | Feature | Reactive budgeting | Planned budgeting |
|---|---|---|---|
Hardware refresh | Emergency capital request | Rolling replacement from a fleet register | |
Licence cost | Grows quietly, rarely reviewed | Reviewed at renewal, leavers reclaimed | |
Security spend | After an incident | Baseline maintained, reviewed annually | |
Projects | Compete with operations | Separately budgeted | |
Predictability | Low | High |
The categories to budget separately
- Run cost: support contract, licences, connectivity, backup. Predictable and recurring.
- Refresh: devices, servers, network hardware on a replacement cycle rather than to failure.
- Projects: migrations, office moves, new systems. These should not compete with run cost.
- Security: baseline tooling and periodic assessment. Budget it deliberately or it will only ever be funded after an incident.
- Contingency: something between five and ten percent. Something will happen.
What people forget
- Licences for staff who left. This is the most common source of quiet overspend we find on audit.
- The cost of the connectivity you actually need rather than the one you signed up for years ago.
- Backup for cloud data, which is a separate purchase from the cloud subscription.
- The refresh that is due in eighteen months. Budgeting for it now is far easier than finding it later.
Building a defensible plan
- Start from an asset register with age and warranty. Without one you are guessing, and a guessed budget is the one that gets cut.
- Separate what keeps the business running from what improves it. Those get different scrutiny and should be argued differently.
- Attach each line to a consequence. "Replace 40 laptops" is weak. "Replace 40 laptops now out of warranty, currently generating a third of all support tickets" is a decision.
When the other option is right
If your estate is small and stable, a formal budgeting exercise is overhead you do not need. Keep an asset register, watch the licence count, and revisit annually. The structure above is for businesses where IT spend has become large enough that guessing is expensive.
Building the plan for this year
- Start from an asset register with age and warranty. Without one every number in the plan is a guess, and guessed numbers are the ones that get cut.
- Reconcile licences against current headcount. Reclaiming leaver licences usually funds a meaningful part of whatever else you are proposing.
- Separate run cost from projects, and argue them differently. Run cost is a floor; projects are a choice.
- Attach a consequence to each line. "Replace 40 laptops now out of warranty, generating a third of all tickets" survives scrutiny in a way "replace 40 laptops" does not.
- Put security in as its own line. Bundled into general IT it is the first thing cut, and it is the one category where deferring transfers risk rather than saving money.
Questions
Common questions
Still deciding?
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