IT budget under control is something many mid market CEOs and CFOs struggle to achieve. We often meet leaders who feel like they are constantly banging their heads against a brick wall when it comes to IT spending. For them, IT feels unplanned and unproductive, the Board is frustrated, and the IT team feels the same. It can seem like money is spent on the wrong things, with little clarity on value or return.
Here are five steps to get this situation under control.
1. Make sure there is clear IT leadership.
It’s impossible to run a business without IT, so the Board need to understand they have to spend money on it. And a competent member of the senior team – someone with business and tech experience – needs to understand the IT budget in detail, to take accountability for it, and to own its successful delivery. Too often, no-one around the Board table is really able to say for sure if the spend is appropriate – if your business is in the sweet spot between not under-investing and not getting ripped off by suppliers.
2. Ensure the business strategy and the IT strategy are aligned.
The IT expenditure always needs to be justified in terms of its alignment with business goals and if there’s a clear ROI. Each and every IT project needs to be mapped to business objectives and fully costed; efficiency savings or sales uplifts must be identified. (For help thinking it all through, book an IT assessment for growth.)
3. Figure out what’s normal.
Getting budgets under control is much easier when there is a consensus about what’s normal. Average spending on IT varies between sectors, company size, and other factors; benchmarking yourself against these averages can help create a consensus around what is normal and what your level of IT spend could and should be.
4. Re-examine your insourcing / outsourcing strategy.
Outsourcing can be a good way to rationalise IT and save money, but too often companies outsource the wrong things. So consider which aspects of IT are just commodities and which are core aspects of your business value. And if you are making serious outsourcing decisions, then go through a proper tendering process. When you are keeping IT functions in-house, make sure the senior team are able and committed to managing them well (see point no. 1 about leadership).
5. Refresh and replace where necessary.
Old kit needs replacing. It becomes unreliable, expensive, and incompatible. You can pretend that’s not true, but then sooner or later you’ll run into unbudgeted problems. Or you can agree on a replacement policy and plan accordingly. It avoids unpleasant surprises, as well as freeing up time and energy for proper discussions about how IT can really make a difference to the business.
Getting your IT budget under control is not about cutting costs for the sake of it. It is about making informed decisions, investing in the right areas, and ensuring technology genuinely supports your business goals. With clear leadership, aligned strategy, realistic benchmarking, and a proactive approach to refreshing systems, IT can move from being a source of frustration to becoming a genuine business enabler.
Many organisations struggle because IT has grown organically over time without clear ownership or oversight. Taking the time to review your approach, understand where money is really being spent, and plan for future investment can deliver meaningful improvements in efficiency, resilience, and performance.
If you would like independent guidance on how to get your IT budget under control, our experienced IT leaders are here to help. Small changes today can lead to big improvements tomorrow.