How much should you really be spending on IT?
A question that our IT consultants often hear is:
“How much should I be spending on IT
and is it worth it?”
The short answer is anywhere between 3% – 7% of your annual turnover.
But where your business lies within this range depends on a few factors.
How reliant are you on IT?
Naturally, this may be determined by the type of industry that your business operates within. Some are typically more reliant on IT than others.
For example, a Deloitte study found that on average, the banking and securities industry invests 7.16% of annual turnover into IT. Whereas the construction industry only spends 1.51%.
Even if IT isn’t a large part of your business strategy right now, you need to consider the future and how an IT strategy review could take your business to the next level.
Essentially, to add value to your business with IT, you need to be looking at investing a minimum of 3% of your annual turnover.
MSP vs Break/Fix
“Not all MSPs are created equal.”
Many businesses outsource their IT support to a IT company with a break/fix business model.
This works out cheaper than working with an experienced managed service partner (MSP) but comes with significant drawbacks.
Break/fix is reactive, whereas an experienced MSP will deal with IT issues proactively.
Strategy-focused support from an MSP adds value to your business, making IT decisions based on your wider business strategy. Conversely, break/fix adds no value to your business and will ultimately result in you spending more money than you save.
Ultimately – with IT support, you typically get what you pay for.
How good is your data management?
Data breaches are catastrophic – for any business.
They’re expensive, erode trust, and the cleanup can take a really long time.
A data breach is also a signal to cyber criminals that your business is ripe for exploitation. This increases the risk of another cyber attack.
You can minimise this risk with a robust IT strategy and cyber security plan, as part of a managed service.
In short, cyber crime will cost your business money in some form.
Our view is that prevention is better than cure.
Let’s look at the statistics.
The average cost of a data breach is estimated to be around £2.95m.
Furthermore, GDPR data breach fines can reach up to €20 million, or 4% of global annual turnover.
But even a much smaller fine will still cost your business more than any investment in IT.
And much like break/fix IT support, a fine is not investment.
On the other hand, investment in managed IT support is a positive, proactive outgoing.