IT budgeting: We break down the process and give you a template for creating an effective, reliable IT budget.

When Should IT Budget Planning Start and Who Should be Involved?

Successful planning of a reliable IT budget should start 6 months before your IT budget is “due”. Effective planning of an IT budget must consider long-term business needs as identified by leaders in all departments. Ideally, senior leadership will sit down with in-house or external IT consultants and map out what they would like to accomplish through technology in the next year, and over the next three years. From there, line items are created, categorized, and tied to costs for the next year and the next three years.

Which Categories Should an IT Budget Include?

Realistic IT budgets account for business needs, routine maintenance, system replacement costs, hardware and software licenses and warranties, and even unexpected system failures. Organizations should start with their IT budget from last year and make improvements; the resulting budget should not only guide your technology spending, but also serve as a planning and communications tool for your organization. The categories all IT budgets, across industries, should include are as follows:


This refers to all costs related to the support and maintenance of your IT environment—your network and infrastructure. These are the ongoing expenses required to maintain your current environment and provide adequate helpdesk and user support. For most organizations, this includes the following:

  • Salaries and benefits for all internal IT staff
  • Monthly support costs for external IT consultants
  • Annual support costs for any vendors of hardware and software you own
  • Training and education for internal IT staff to make sure they are kept informed about cutting edge IT for your industry
  • Data network including WAN connections, ISP links, VPN expenses
  • Outsourced services costs, including monitoring, patching, helpdesk, spam filtering, and any other managed services


This category includes all your current equipment costs plus any additional hardware you plan to purchase, and the cost of any routine hardware implementations (i.e., 4 hours of labor to install a new computer). Larger hardware implementations that require significant planning should be included in the project section of the budget. Note that an environment with standardized equipment (same year computer and laptop models running same versions of software) will be easier to manage and support. Industry standards suggest that computers and laptops should be replaced every three years and that servers should be replaced approximately every five years. The hardware category in your IT budget should include the following:

  • Computers
  • Laptops
  • Servers
  • Firewalls
  • Routers
  • Switches
  • Cabling
  • Warranties
  • Licenses
  • Renewals
  • New Purchases
  • New Warranties
  • New Licenses
  • Routine Hardware Implementation


This category includes all your current, software costs plus any software purchases you anticipate, and the cost of any routine software implementation (i.e., 2 hours of labor to install and test a piece of software on a user’s machine). Larger software implementations that require significant planning should be included in the project section of the budget. The software category in your IT budget should include costs for the following:

  • Server Software
  • Laptop Software
  • Desktop Software
  • Antivirus
  • Anti-Spam
  • Backup Software
  • Licenses
  • Renewals
  • New Purchases
  • New Licenses
  • Routine Software Implementation

Cloud Services

This category includes any cloud services provision – including applications as a service, desktops as a service (hosted desktops), hosted email, and so forth. It should include costs associated with public cloud, private cloud, or hybrid cloud models and implementation.

Backup, Disaster Recovery, and Business Continuity

This category includes all costs associated with your backup, disaster recovery, and business continuity systems and plans; it could include software, an ongoing monthly cost if you outsource this function, mirrored data and storage at a datacenter, or other solutions. When evaluating the costs associated with this category, be sure to consider:

  • Software
  • Hardware
  • Colocation
  • Outsourced Backup
  • Licenses
  • Renewals
  • New Solutions (new hardware, software and ongoing expenses if applicable)


This category should include any projects planned for the coming year including any infrastructure updates like a transition to a full or hybrid cloud model, full workstation or server replacements, and other adjustments to your environment that do not happen every year. It should also include new equipment and software that require significant time and planning to implement and integrate. This category should include costs for:

  • Project Planning
  • Project Implementation
  • New Equipment
  • New Software


This category should be added to your IT budget to offset any IT emergencies or unforeseen events. It should total approximately one month’s worth of your organization’s IT support and maintenance cost.

Last Word

IT budgets are notorious for being “subject to change”. Unfortunately, this is because most organizations don’t capture every cost and expenditure associated with information technology. By their very nature, IT budgets will fluctuate in waves, in accordance with hardware replacement cycles. With proper planning, however, you can usually predict and stay within your IT budget’s parameters year after year—and avoid costly surprises.