Every October, the same ritual plays out at small and mid-sized businesses across Massachusetts. Someone pulls up last year’s spreadsheet, adjusts a few line items for inflation, and calls it a technology budget. It’s not really planning. It’s forecasting last year forward, which works fine until the year it doesn’t.
Small businesses are not sitting on their hands here. Seventy one percent increased their overall technology budget in 2024, and only eight percent cut it, according to SMB Group’s research. Average IT spending now sits at roughly 3.4 percent of revenue for small firms, per Gartner, with wide variation by industry: financial services and professional services run closer to 6 to 7 percent, while construction and traditional retail sit under 2.5 percent. The money is moving. The question is whether it’s moving on purpose.
The budget usually comes before the plan, and that’s backwards
Most owners build next year’s number first, then figure out what to spend it on. Building the roadmap first, deciding what the business actually needs to look like in 12 to 24 months, and only then letting the budget follow from that, is rare. That’s the gap a vCIO (virtual Chief Information Officer) style planning process is built to close: pairing technical decisions with the business goals driving them, instead of treating IT as a cost center that gets a haircut or a bump depending on how the year went.
There’s a real signal that this shift is already underway. CompTIA found that 52 percent of small businesses increased their security budgets specifically, compared to 38 percent that increased IT spending overall. Security spending is outpacing general IT growth, which usually means budgets are starting to follow actual risk rather than old habit. Where the money is going has shifted too. SMB Group’s latest breakdown shows:
- Cloud services: 38 percent of the IT budget, up 4 points year over year
- Cybersecurity: 14 percent, up 3 points
- Managed IT services: 12 percent
- Hardware: 13 percent, down from 22 percent in 2021 as refresh cycles stretch out
- AI tools and automation: 5 percent, up 4 points from a near standing start
That hardware number dropping while cloud and AI climb tells its own story: capital spending is giving way to operating spend on services that scale with the business instead of aging in a closet.
Why the next few months matter more than the number itself
Q4 is when the constraints for next year actually get set. Vendor contracts come up for renewal. Software licensing gets trued up. Hardware lead times start dictating what’s even possible by Q1. A business that waits until January to think about its technology roadmap has already lost the leverage that comes with deciding ahead of the renewal date, not during it.
This is also where the payback math gets interesting. Deloitte’s research on technology ROI found 67 percent of businesses report positive returns within 18 months, and that number jumps to 81 percent among firms that track ROI against defined metrics from the start, not the ones that measure it after the fact and hope. Median payback periods vary a lot by category: AI and automation projects pay back in around 9 months, cloud migrations in 11, cybersecurity investments closer to 18. Knowing that ahead of budgeting changes what gets prioritized and what gets pushed to next cycle.
There’s also a cost argument for getting outside help with the planning itself. CompTIA’s 2025 study on managed services found that businesses using an MSP spend 15 to 25 percent less on total IT than those running it entirely in-house, largely because planned spending beats reactive spending almost every time.
What this looks like done well
Cloud9 Tech Solutions works with ownership teams during exactly this window, building a documented IT roadmap tied to where the business is actually headed: growth plans, compliance obligations, staffing changes, the works. From there, the budget conversation gets a lot shorter, because the number is just the output of a decision that’s already been made, not the start of one made under deadline pressure in December.
If your 2027 planning is still a copy of this year’s spreadsheet with the numbers nudged up, now is the window to change that. The businesses that treat the next 90 days as planning time, rather than budget-approval time, consistently end up spending less and getting more for it.
IT Budget Planning Questions
How much should a small business spend on IT?
Gartner puts the small business average near 3.4 percent of revenue, though industry makes a big difference. Financial and professional services firms often land around 6 to 7 percent, while construction and traditional retail tend to sit below 2.5 percent. A roadmap tells you where your own business should fall.
Should the IT roadmap come before the budget?
Yes. Decide what the business needs its technology to do over the next 12 to 24 months, then build the budget from those decisions. Doing it the other way around usually just carries last year’s spending forward with a small adjustment.
When should 2027 IT planning start?
The fourth quarter is the right window. Contract renewals, license true-ups and hardware lead times all start shaping next year’s options well before January arrives.
Where are small businesses increasing IT spending?
Cloud services and cybersecurity are both taking a larger share of the budget, and AI tools are growing from a small base. Hardware’s share has been shrinking as refresh cycles stretch longer.
Schedule a free security assessment with Cloud9 and let’s find out what your 2027 roadmap should actually look like before the budget gets locked in.