Rules of Thumb for Technology Budgeting
There's no simple cookbook formula for technology budgeting in a small organization. Your organization's unique activities, current equipment, human resources and business requirements all will affect your technology budget. However, here are some general rules of thumb we've found helpful in working with our clients here at ONE/Northwest.
The "technology" you must budget for includes lots of different things
An organization's "technology" budget can (and should!) include a number of different types of expenses, which may show up in various lines in your organization's budget spreadsheet. Here are some of the types of technology-related expenses your organization may need to budget for:
- New workstations for new staff members
- Routine replacement of aging workstations
- Routine software upgrades
- Hardware for general/shared use such as printers, digital cameras, scanners, etc.
- Servers and other "core" infrastructure
- Routers, firewalls and other network connectivity equipment
- Technology training for new staff
- Ongoing technology education for all staff -- especially your "technology responsible people"
- Periodic major organization-wide systems investments such as website ugprades, relationship management database upgrades, timetracking and accounting system upgrades, etc.
- Technology systems that are specific to particular projects or program ares-- e.g. a database for tracking logging projects, or a website dedicated to a specific public-facing initiative
- Routine ongoing technical support (if you don't have a strong technologist on staff)
- Emergency technical support (when things break)
- Email, website, internet connection and other ongoing service charges
- Technology strategy and project planning
What Stuff Costs: Helpful Rules of Thumb
Here are some of the very rough rules of thumb we often use for estimating different technology costs in small (2-15 person) environmental organizations.
| Item | Costs and assumptions |
| Desktop workstations | About $1000 each w/ 17" LCD monitors & 3-year warranties. About $600 for just the box, no monitor. We assume that a machine will have a 3-year lifetime. Budget for an hour or two of support time to configure and install each new machine. |
| Laptops | About $1500 each. Again, assume about a 3-year lifetime, but a higher likeihood of needing repair or unexpected replacement. Budget for an hour or two of support time to configure and install each new machine. |
| Servers | A typical small-office server will run about $1500 and should last 3-4 years. Sometimes a bit longer. Budget for 4-8 hours of support time to install an upgraded server, perhaps a bit more if this is your first server. |
| Basic software tools | Figure about $100-$150 workstation every 2-3 years. Many software manufacturers make low-cost products available through CompuMentor's TechSoup Stock program. |
| Routine technology support | Figure about an hour per FTE per month. Prevailing hourly consulting rates vary from place to place, but $70/hr is a good average. |
| Technology training | About $200-300/year per person. Perhaps double thatfor your technology responsible people. |
| Backup systems | About $400 for hardware, and up to another $500-700 for software. If you're a <5 person office, you can probably halve that. |
| Printers | A solid duplexing black-and-white laser printer with good paper-handling options will usually run around $800-$1200. Figure $1500-2000 for a color laser. |
"Two Percent for Technology"
In total, these routine expenses often average out to about 2% of a typical organization's budget. This is the "two percent for technology" rule of thumb we often use to make a back-of-envelope estimate of what an organization's technology budget should be. We derived this figure from our own experience, plus some informal survey research we conducted in 2001-2002 of Northwest environmental organizations' current technology spending. The "two percent rule" does not include the irregularly-scheduled "special projects" you might undertake, such as:
| Website redesign | projects typically run from about $1500 up to $10,000 depending on your size and ambition. Average is about $3000-$5000. |
| Database overhaul | Typically a $5000-$10,000 project when you include planning, software and implementation. Depending on the specifics, hardware costs can add another $1000-$1500. |
| New phone system | ~$200 per extension is a good rule of thumb, but costs can vary considerably, and a new generation of computer-based phone systems promises some pretty radical cost reductions. |
What's a capital cost, what's overhead, and what's a special project?
We're not accountants at ONE/Northwest, so you should always consult with yours before making any drastic moves. But it doesn't take an accounting whiz to notice that technology costs come in many flavors. sme kinds of technology costs are infrequent, large and predictable (like replacing your staff's workstations). Some are unpredictable (things break). Others are steady ongoing costs (like internet access, email newsletter services, support contracts). Some costs are closely associated with individual headcount, while others are spread across the entire organization and don't scale quickly as you add or remove people.
You probably shouldn't dump all of these costs into the a single "technology" line item in your budget. Instead, work with your accountant or bookkeeper to figure out which technology expenses to treat as capital costs, which to treat as program expenses, and which to treat as operating/overhead expenses. The answers may be less obvious than you think. Because certain technology tools (e.g. a computer for every staff person) are pretty much required to do any work at all, it may make sense to build as much "capital" technology expenses as you can into every program and project budget, as well as a proportional share of the "general technology overhead" costs.
