In any company, managing IT expenditure is an essential step in the development of the business.
It requires careful consideration of current activities on the one hand, and new IT projects to be implemented on the other.
This should enable the Information Systems Department (ISD), if this is the case in your company, to build a sustainable proposal for the IT function. 
Would you like to manage your IT expenses more effectively?
Read our top tips.
What are IT costs?
A company’s IT expenditure or IT budget is the amount allocated to and spent on a company or organization’s information technology systems and services.
An IT budget comprises many components, such as operating, investment and project categories.
And types of expenditure, such as software, hardware, subscriptions and services.
What is a typical IT budget?
First and foremost, it aims to balance IT Department activity between expenses and services.
Expenses are listed and totaled by type (infrastructure, operations, support, maintenance, projects, etc.).
The IT department budget represents between 1% and 9% of a company’s budget, depending on the business sector.
The trend is for this proportion to increase.
Here are a few examples of the maximum ratio of IT spending to sales, by sector:
- Financial services, banking: 9%.
- Telecom: 5.5
- Consulting and services, IT: 4.5
- Electronics, Health, Insurance, Transport: 3.5
- Automotive, Chemicals, Consumer goods, Energy: 2%.
- Building, Distribution: 1% of sales
Please note: these ratios vary widely, depending on the sector and the size of the company.
One of the difficulties lies in the uncertainty surrounding the inclusion of all of the company’s IT expenditure: not only that managed directly by the IT department, but also that which is less visible because it is diluted in the budgets of the IT department’s client businesses.
According to a study by The Comptuer Economics IT Spending and Staffing Benchmarks in 2020-2021, companies show a clear preference for devoting their IT budgets to the cloud.
This is followed by data analysis/business intelligence, digital transformation and other data-driven solutions, cloud and backup.
How do you determine your IT expenditure?
To anticipate and control your IT expenses and costs, you need to start by understanding and estimating them.
To do this, the first step is to carry out a comprehensive audit that takes into account :
- a strategic plan ;
- an IT master plan: an operational reflection of the company’s strategy;
- a checklist of projects: completed, in progress and future ;
- calculating the profitability and added value of the projects listed .
It’s by drawing up an inventory that you’ll be able to correctly assess whether your IT equipment needs some improvements to improve efficiency, or whether it’s up and running.
How to save on IT costs
A company’s IT equipment is a major investment in its expenditure budget.
That’s why it’s important totake the right steps to avoid unnecessary extra costs.
Here are a few simple examples to help you make savings:
- get rid of obsolete equipment;
- take care of your equipment to prolong its life ;
- switch off equipment or put it on extended standby during hours of absence (nights, weekends, etc.);
- avoid numerous impressions that are not always useful.
etc…
Beyond these simple everyday gestures, there’s another important aspect to consider: the security of your IS.
Indeed, cyber-attacks resulting in the loss of your company’s data can be very costly.
To limit the risks, you need to allocate a budget to cybersecurity.
Discover some of our resources on this subject:
- An article on useful steps you can take to protect your business from cyber attacks.
- An infographic to help you understand what to do in the event of a cyber attack.
Bonus: our tips for controlling your IT costs
Setting up a follow-up with a real process Rigor is the key word.
To make sure that everyone respects their mission and the procedures in place, communicate clearly with everyone in the company and teach them how to check that each point is respected. Implement digital expense management If you use a system that enables automated retrieval of invoices that are added to your accounting system, you’ll find that this can help you optimize expenses. Centralize tracking of subscription-related expenses Each subscription (software, licenses, hardware, etc.) must have its own invoice.
Make sure you check each one to avoid unpleasant surprises. Last simple and useful gestures
- Control what you use (or don’t use) in duplicate, such as software, applications, etc.
- Reduce software license costs .
- Reinforce the maintenance of your IT equipment rather than having to throw it away.
- Outsource your IT services(Managed Services) for better control of your budget (and your time!).
