IT Budget Planning for London SMEs: A 2026 Framework

Stop budgeting IT as 'whatever broke last year'. Here's a structured approach that gets boardroom buy-in.

Most IT budgets are guesses

For too many London SMEs, the IT budget conversation is "what did we spend last year, plus a bit". That's not a budget — it's a flinch. A modern IT budget should map cleanly to business outcomes, with three distinct buckets.

The three-bucket framework

  • Run the business (RTB). Licences, support, connectivity, hardware refresh, backup. Predictable, recurring, non-negotiable.
  • Change the business (CTB). Migrations, new tools, automation, integrations. Discretionary, but tied to growth or efficiency targets.
  • Risk reduction. Cyber controls, compliance, DR. Often under-funded until something goes wrong.

For a typical 25–50 person professional services SME, a healthy split is roughly 60% RTB, 25% CTB, 15% risk reduction.

Realistic benchmarks for London in 2026

  • Total IT spend as % of revenue: 3–6% for non-tech SMEs, 6–10% for tech-led businesses
  • Per-user managed IT cost: £55–£95 / user / month all-in
  • Cyber tooling on top: £15–£30 / user / month for proper EDR + email security
  • M365 Business Premium: ~£18 / user / month

If you're significantly under these numbers, you're either exceptionally efficient or carrying hidden risk.

Building the conversation for the board

Frame every line item against an outcome:

  • "MFA rollout reduces credential compromise risk and is required by our cyber insurance"
  • "Windows 11 refresh removes us from extended support charges and reduces patch management overhead"
  • "Power BI licences eliminate three days of manual reporting per month from finance"

Boards fund outcomes, not line items.

What to cut if you must

  • Duplicate SaaS subscriptions (audit your card statements — there's always more than you think)
  • Over-provisioned cloud storage tiers
  • Hardware leases reaching end of term
  • Underused phone or conferencing platforms

What never to cut

  • Backups
  • MFA and identity tooling
  • EDR
  • Anyone's salary on the IT team without a plan

Want a second opinion on your IT budget?

We run free 30-minute IT budget reviews for London SMEs. Book on Calendly or message us on WhatsApp — we'll benchmark you against comparable businesses and flag the obvious risks.