IT Budget Breakdown by Category
Updated 26 March 2026
How a well-structured IT budget should be allocated across the five core categories, with benchmarks, what is included, and warning signs for each.
28-32%
IT Personnel
26-30%
Software and SaaS
20-24%
Infrastructure
10-14%
Security
7-10%
Support and Maintenance
IT Personnel
Recommended
28-32%
Typical range
25-35%
IT staff salaries, benefits, and contractor costs. This is the largest category and the one with the most strategic leverage. Underspending here creates capability gaps; overspending without the right skills creates waste.
Typically includes
- Internal IT staff salaries and benefits
- Contractors and managed service providers
- Training and certifications for IT staff
- Recruitment costs for IT roles
Red flags
- Single person responsible for multiple critical functions (key person risk)
- IT staff spending more than 50% of time on reactive support tickets
- No budget for training or certification renewal
Software and SaaS
Recommended
26-30%
Typical range
20-35%
Software licences, SaaS subscriptions, and development tools. This is the fastest-growing category for most organisations. SaaS spend often grows 15-25% per year without active management due to individual team purchases and auto-renewals.
Typically includes
- Business SaaS applications (CRM, HR, finance)
- Developer tools and cloud platforms
- Productivity and collaboration tools
- Data and analytics platforms
Red flags
- No central visibility of all SaaS subscriptions
- Multiple overlapping tools serving the same function
- Auto-renewals for unused or underused licences
Infrastructure
Recommended
20-24%
Typical range
15-30%
Cloud infrastructure, data centres, networking, and hardware. The right-sizing of this category has the most variance. Legacy on-premise infrastructure often results in overspending relative to the business value delivered. Cloud can save money or cost more depending on optimisation.
Typically includes
- Cloud provider spend (AWS, Azure, GCP)
- On-premise servers and data centre costs
- Network and connectivity costs
- Endpoint hardware (laptops, mobile devices)
Red flags
- Cloud spend growing faster than headcount or revenue
- No cloud cost management tooling in place
- Significant over-provisioned compute or storage
Security
Recommended
10-14%
Typical range
6-15%
Cybersecurity tools, assessments, and insurance. This is the most commonly underfunded category. Many organisations spend 6-8% on security and believe they are adequate until an incident proves otherwise. Post-breach, security spend typically jumps to 18-25% of IT budget.
Typically includes
- Security tools and platforms (EDR, SIEM, WAF)
- Penetration testing and security assessments
- Security awareness training for all staff
- Cyber insurance premiums
Red flags
- Security spend below 10% of total IT budget
- No annual penetration test or security assessment
- No security awareness training for employees
Support and Maintenance
Recommended
7-10%
Typical range
5-15%
Vendor support contracts, hardware maintenance, and break-fix costs. This category tends to grow as the technology estate ages. Organisations with significant legacy systems often see this creep to 15-20% of IT budget, squeezing capacity for innovation.
Typically includes
- Software vendor support contracts
- Hardware maintenance and extended warranties
- Break-fix support for on-premise equipment
- Legacy system maintenance costs
Red flags
- Support costs growing as a percentage of IT budget year-on-year
- Legacy systems with vendor support end-of-life approaching
- No plan to retire or replace high-maintenance systems
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