By LNS Solutions | 5 min read

How to Review Your IT Budget and Prepare for 2025

With the end of 2024 upon us, now is a good time to take stock of what worked in your business this year and what didn’t.

This is particularly important in the realm of IT. Shifting business priorities and new technologies can mean that what worked just last year or a few years ago could be out of step with your needs, especially if you plan on taking advantage of new technologies in the coming year.

While all small business IT budgets will involve trade-offs to some extent, here are some tips that you can use to make wise choices and position yourself for higher productivity and more efficient budgets in the new year.

Review Products: Have Your IT Investments Delivered Results?

Before setting your plan for 2025, it's crucial to look back at the purchases you made over the past year. The software you bought to streamline operations, and the hardware you replace to keep things running smoothly. Were these investments worth the cost?

Did they help you meet your operational goals? It’s time to ask hard questions, be honest about underperforming systems, and focus on high-impact areas.

Software Review: Over the past year, you may have upgraded your servers, subscribed to new software, or rolled out cloud services. For many businesses, these software costs can consume up to 34% of their IT budget, yet a significant portion of those licenses go unused.

About 30% of software licenses are never used, and another 8% are rarely used. Add up all these costs and you’re looking at a significant chunk of your IT budget that could be better spent elsewhere.

Hardware Review: Just as with software, your hardware infrastructure requires a thorough review. In the past year, your hardware mix has likely expanded to include more laptops, routers, workstations, printers, and other critical equipment.

Try to understand the costs holistically. Is the total cost of ownership (TCO), which includes operational and maintenance costs, affecting your budget the way you planned? It’s often the case that older hardware seems cheaper on the surface but impacts your budget in unexpected ways.

Here are some things to look out for when analyzing your current IT budget:

• Identify Unused Licenses and Subscriptions Small businesses often fall into the trap of purchasing software licenses in bulk but using only a fraction of them. Maybe you bought ten licenses for a project management tool but only five team members are using it. Perhaps you subscribed to a service you no longer need. In fact, according to G2, nearly two-thirds of companies over-license their software to avoid penalties from audits, leading to unnecessary expenses.
• Training costs: As your technology stack evolves, so must your workforce. This presents additional costs in terms of training. According to TechTarget, CIOs allocated nearly 35% of their IT budgets toward personnel costs, particularly in upskilling and reskilling initiatives.
• Eliminate Redundant Tools and Streamline Your Toolset: It’s easy to overlook and add new software without realizing they’re duplicating a functionality you already possess! Here’s a common example: you have both an email marketing platform and a CRM system that overlap in features like email campaign tracking. Consolidation can lead to quick wins.
• Overlooking Total Cost of Ownership (TCO): While many focus solely on the initial cost of hardware, it's crucial to consider the entire lifespan of the equipment. With ongoing maintenance, repairs, upgrades, and energy consumption, costs can pile up quickly.
• Ignoring Future Scalability: Many businesses focus on addressing their immediate needs when investing in hardware. While this approach might seem cost-effective in the short term, it can quickly turn into a scramble to upgrade or replace outdated equipment.

Review Users: What Do Your Employees Say?

Your employees' firsthand experiences offer the most valuable insights into your IT investments. As the primary users of these tools, they interact with them daily.

Before preparing your IT budget, take the time to gather feedback from them to ensure that your investments align with their actual needs. This way, you'll know if your current stack enhances or hinders productivity, which tools are truly essential, which are underperforming, and where there might be opportunities for cost-effective improvements.

Network Performance: Even minor network downtimes can have a significant impact on your bottom line.

Findings indicate that the average cost of downtime per minute for small businesses is $427. Now think about how many network outages or slowdowns your organization experienced this year, and how those disruptions correlated with lost productivity or sales. Improving network reliability and performance are low-hanging fruit that can visibly make an impact on your ROI.

Help Desk Support: It’s essential to assess how well your help desk setup supports your employees throughout the year. Key metrics like First-Time Resolution (FTR) rates and Mean Time to Resolution (MTTR) offer insights into your support’s effectiveness. If issues recur, it could indicate deeper system problems or gaps in training.

You'll need to roll up your sleeves and investigate further to identify the root causes.

If you discover that your current setup is lacking, it may be time to consider alternative options. You might want to switch vendors or reflect on your team's skills. You’ll need to ask yourself if your internal team has the necessary expertise to address your support challenges effectively. If there are gaps, consider the costs and overheads of hiring internally against outsourcing to a specialized provider.

Addressing Business Continuity

With hurricanes Milton and Helene striking Florida back-to-back, they've left a trail of destruction in their wake and impacted thousands of businesses. The Small Business Administration is nearly running out of funding for disaster relief loans.

Events like these serve as stark reminders. The necessity of having a solid business continuity plan is unmistakably clear. After all, you never know what next year holds.

Small businesses are vulnerable to operational disruptions from both natural disasters and cyberattacks. And both threats are on the rise.

Assess Threats: Start by conducting a thorough risk assessment of your IT infrastructure. Whether you're up against hurricanes or cybercriminals, it's crucial to protect your operations and data. Your strategy should be comprehensive to ensure you're fully prepared.

Ensure Reliable Data Backups: Now that you understand your risks, implement an automated system for regular cloud backups.

After you’ve laid out a business continuity plan, allocate a portion of your budget for your IT towards this crucial function and prioritize it to ensure your company can continue functioning smoothly after any crisis.

Planning Your IT Budget for Next Year

Once you’ve reviewed your IT investments, gathered user feedback, and established a continuity plan, it’s time to align your IT spending with your business goals. As you look ahead to next year, consider your business goals. What do you hope to achieve, and do you have the right tools in place to make those ambitions a reality?

Building a budget is more than just a financial exercise; it’s the foundation for ensuring key projects get completed on time and provide the desired outcomes.

By aligning your business objectives with your IT resources, you can make the most of your investment and position your business for success in 2025. Whether it is cutting down on unnecessary tools, strengthening your network, or aligning IT with your growth strategy, smart investments now will pay dividends in the year ahead.

LNS Solutions Can Help Streamline Your 2025 IT Budget

For decades, we’ve had businesses in Tampa take control of their IT budget and optimize network uptime. If you’re struggling with budgeting questions, contact us any time at (813) 393-1626 or info@lnssolutions.com. We look forward to speaking with you!