---
title: How to Make an IT Budget (+IT Budget Template)
description: Building an IT budget is a necessity for controlling IT spend and meeting your technology goals. Check out our sample IT budget template!
---

[Cybersecurity, IT Managed Services, Software | MSSP Blog ](https://www.systems-x.com/blog)

# [How to Make an IT Budget (+IT Budget Template)](https://www.systems-x.com/blog/make-an-it-budget)

 Written by [Rubens Perdomo](https://www.systems-x.com/blog/author/rubens-perdomo) | May 7, 2021 1:00:00 PM

Budgets are a key part of the effective management of any business. Being able to control spending and prioritize what should or shouldn’t receive funding is crucial for ensuring stability in any key business operation. IT operations are no different.

[According to Gartner](https://www.gartner.com/en/newsroom/press-releases/2020-10-20-gartner-says-worldwide-it-spending-to-grow-4-percent-in-2021), global IT spending is projected to reach $3.75 trillion dollars in 2021—a growth of 4% over IT spend in 2020. However, simply spending more on information technology doesn’t guarantee success. On the other hand, not spending enough on the right IT initiatives can compromise a business’ competitiveness.

 

## Why You Need to Have an IT Budget

Having a well-planned IT budget is crucial for ensuring that the business has the right information technology tools in place. Without sufficient budget planning, it is all too easy for IT departments to [waste money on frivolous tech](https://www.systems-x.com/tracking-it-spend-and-project-management-roi) that doesn’t provide much ROI—or to be underfunded to the point that they cannot accomplish their core goals.

A strong IT budget can help a business meet its most critical goals by helping them acquire the right technology at the right time. Technology spending is a crucial part of modern business—setting a budget is how companies focus their spending on achieving positive business outcomes.

As noted by *[Tech Republic](https://www.techrepublic.com/article/it-budgeting-the-smart-persons-guide/)*, “IT budgeting can range from a painful annual process to the actualization of a carefully crafted IT strategy and roadmap.” While the process of creating a budget can be stressful, it is often well worth it!

Need to Control Your IT Spend? [Discover the Benefits of Managed IT Services!](https://www.systems-x.com/en-us/managed-it-services)

## 7 Critical Components of an IT Budget

While there will always be some differences depending on the organization, its goals, how it uses IT resources, and even specific workflows and data management tools, there are some things that every IT budget should account for. Here’s a shortlist of some of the most critical components of an IT budget:

- **Hardware Expenses.** Even in the age of c<https://go.systems-x.com/paying-enough-for-it-support>loud-based solutions and bring your own device (BYOD) policies, businesses will need hardware for their IT teams (and all their other employees) to use. This includes expenses for things like servers, employee devices (laptops, phones, tablets, etc.), and infrastructure updates.
- **Maintenance Expenses.** Hardware and network infrastructure will need to be maintained to keep operating at peak efficiency. Setting aside funds for preventive maintenance and necessary upgrades can help prevent downtime and cost overruns.
- **Software Expenses.** Many businesses require specialized software for their key business processes. This means paying for software licenses and service subscriptions if using pre-built solutions from third parties. Or, if engaging in [custom software development](https://www.systems-x.com/is-custom-software-development-worth-it), paying for R&D, troubleshooting, bug fixes, and other expert labor internally. Naturally, the costs of using software from an external developer are much easier to budget for since they’re more consistent.
- **IT Project Expenses.** Will the company launch any major IT initiatives during the year? If so, project expenses such as administrative costs, project-specific hardware and software costs, labor, and consulting will need to be accounted for.
- **Emergency Expense Reserve.** Some organization might try to establish a reserve for covering major, unexpected IT expenses. For example, a company might set aside funds for data breach recovery expenses, [meeting new regulatory standards](https://www.systems-x.com/prepare-your-business-for-cmmc), or replacing a high-skilled IT position.
- **IT Department Staffing.** The salaries, bonuses, and benefits paid to IT staff needs to be accounted for in the IT budget. There also needs to be money set aside to handle things like recruiting new IT staff or providing IT training.
- **IT Overhead Costs.** For internally-owned IT assets, the company will need to meet certain overhead costs. For example, if using privately-owned servers, the company will need a data center to host them. This means acquiring real estate, setting up a server room (complete with power, network access, and cooling), buying and maintaining server racks, and more.
  
  <https://go.systems-x.com/paying-enough-for-it-support>

These are just a few of the top-level categories that a company might need to include in an IT budget template. Many of these cost categories can be further sub-divided into specific types of IT expenses—and there are places where they overlap.

For example, do server racks belong in the “Hardware expenses” category, or the “IT Overhead” category? Is internal IT staff labor for hardware and software maintenance an IT staffing expense, a maintenance expense, or (in the case of a major overhaul) an IT project expense?

It’s important to ensure that, when you craft your IT budget, that questions like these can be answered consistently so that IT expenses aren't tracked twice.

## IT Budget Template Example

When creating an IT budget for a given quarter or the year as a whole, it can help to compare your planned IT spend to what you spent in the previous quarter or year.

Here’s a quick, generic template for planning your yearly IT budget:

### Table 1: IT Staffing

| **Expense Category** | **Last Year’s Spend** | **Projected IT Spend** | **Difference** |
| --- | --- | --- | --- |
| **Full-Time IT Staff** | $208,000 | $212,000 | $4,000 |
| **Part-Time IT Staff** | $100,000 | $110,000 | $10,000 |
| **IT Staff Benefits** | $100,000 | $120,000 | $20,000 |
| **Total** | $408,000 | $442,000 | $34,000 |

 

### Table 2: Hardware Expenses

| **Expense Category** | **Last Year’s Spend** | **Projected IT Spend** | **Difference** |
| --- | --- | --- | --- |
| **New Employee Devices** | $50,000 | $45,000 | -$5,000 |
| **Servers** | $75,000 | $20,000 | -$55,000 |
| **IT Infrastructure (power & data cabling)** | $10,000 | $10,000 | $0 |
| **Total** | $135,000 | $75,000 | -$60,000 |

 

### Table 3: Software Expenses

| **Expense Category** | **Last Year’s Spend** | **Projected IT Spend** | **Difference** |
| --- | --- | --- | --- |
| **Licensing Costs** | $50,000 | $50,000 | $0 |
| **Subscription Costs** | $30,000 | $30,000 | $0 |
| **Total** | $80,000 | $80,000 | $0 |

 

### Table 4: Outsourced IT/Managed Service Expenses

| **Expense Category** | **Last Year’s Spend** | **Projected IT Spend** | **Difference** |
| --- | --- | --- | --- |
| **Outsourced IT Staff** | $150,000 | $150,000 | $0 |
| **Managed Security Services** | $100,000 | $100,000 | $0 |
| **Data Backup Solution** | $30,000 | $50,000 | $20,000 |
| **Total** | $280,000 | $300,000 | $20,000 |

 

### Table 5: IT Maintenance Expenses

| **Expense Category** | **Last Year’s Spend** | **Projected IT Spend** | **Difference** |
| --- | --- | --- | --- |
| **Data Center Maintenance** | $12,000 | $8,000 | -$4,000 |
| **Employee Device Maintenance** | $10,000 | $10,000 | $0 |
| **Spare IT Components** | $500 | $500 | $0 |
| **Total** | $22,500 | $18,500 | -$4,000 |

 

### Table 6: Data Center Costs

| **Expense Category** | **Last Year’s Spend** | **Projected IT Spend** | **Difference** |
| --- | --- | --- | --- |
| **Data Center Real Estate Acquisition** | $100,000 | $0 | -$100,000 |
| **Expansion Costs** | $10,000 | $20,000 | $10,000 |
| **Security Costs** | $50,000 | $50,000 | $0 |
| **Server Update Costs** | $400,000 | $50,000 | -$350,000 |
| **Total** | $560,000 | $120,000 | -$440,000 |

 

### Table 7: Utilities Costs

| **Expense Category** | **Last Year’s Spend** | **Projected IT Spend** | **Difference** |
| --- | --- | --- | --- |
| **Power** | $10,000 | $10,000 | $0 |
| **Internet Access Costs** | $50,000 | $50,000 | $0 |
| **Data Center Cooling** | $50,000 | $20,000 | -$30,000 |
| **Total** | $110,000 | $80,000 | -$30,000 |

 

### Table 8: Total IT Spend

| **Expense Category** | **Last Year’s Spend** | **Projected IT Spend** | **Difference** |
| --- | --- | --- | --- |
| **Staffing** | $408,000 | $442,000 | $34,000 |
| **Hardware** | $135,000 | $75,000 | -$60,000 |
| **Software** | $80,000 | $80,000 | $0 |
| **Outsourced Services** | $280,000 | $300,000 | $20,000 |
| **Maintenance** | $22,500 | $18,500 | -$4,000 |
| **Data Center** | $560,000 | $120,000 | -$440,000 |
| **Utilities** | $110,000 | $80,000 | -$30,000 |
| **Total** | $1,595,500 | $1,115,500 | -$480,000 |

 

This template example is far from comprehensive and reflects a hypothetical example of a company that had a major capital outlay for a new data center and employee devices just the previous year. When creating your own IT budget template, it may help to reflect on the specific costs that affect your company’s IT expenses so you can plan around them.

Need help tackling IT issues? Looking to reduce IT spend with a stable, easy-to-predict outsourced service? Systems X is here to help!

[Reach out to the Systems X team](https://www.systems-x.com/en-us/contact-us) to get started!

<https://go.systems-x.com/it-buyers-guide>

 

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