Do you need help & advice with IT Management?
If you don’t know what to budget for technology, start with a simple headcount rule:
roughly £2,000 to £4,000 per employee, per year. From there, split the
spend into three buckets so you’re not underspending and firefighting, or panic-spending
without a plan.
What are the three budget buckets?
Split your technology spend into three buckets so nothing gets lost inside one
number, and cyber security stops hiding inside general IT costs.
Business as usual
Keeping the lights on: IT support, replacing laptops when they wear out.
Projects
The spend that moves the needle, including AI inside your development work.
Cyber security
Its own bucket, on purpose. As Dave puts it, “that’s a lot of money now” – folding it into general IT spend hides how much it actually costs.
Where does AI spending fit?
Inside your development projects, not as a separate line. If you’re
investing in AI, treat it like any other project: write down what success looks like and
what it costs to get there, then judge it against that.
How do I size the infrastructure budget?
Take what you have, work out its value, and divide by four. Assuming
the business isn’t growing or shrinking massively, that gives a reasonable annual
infrastructure figure without needing to predict every purchase in advance.
How do I justify project spend I can’t fully predict?
Write down the business value before the price tag. For each thing
you’d like to do, note what success looks like and how you’ll measure it. Ask your IT
team, or someone like Dave, for a rough figure once the value is clear rather than
starting from a number and working backwards.
So, what now?
If you don’t have anyone in-house who can turn “I don’t know what I need” into a
number, that’s exactly the gap a fractional IT director closes before you spend a penny.
Frequently asked questions
How much should a small business spend on IT per employee?
Roughly £2,000 to £4,000 per person, per year, as a starting baseline. Businesses that
underspend tend to firefight; businesses that panic-spend after an incident tend to
overspend without getting proportionate value.
What happens if I don't set a technology budget at all?
You won’t get business value from the spend either way. Underspending means you’re
firefighting instead of moving forward; panic-spending, usually after something goes
wrong, means you’re paying for a fix rather than a plan.
Should I ask my IT team for a project budget number?
Yes, but only once you know what business value you’re chasing. Project spend is hard
to predict up front, so write down what success looks like for each initiative first,
then ask your IT team, a consultant, or someone like Dave for a rough figure against
that.
Last reviewed: 1 September 2026.
