Do you actually know what your business spent on technology last year? Not a rough guess pulled from memory, but the real number once you add up software subscriptions, hardware refreshes, support contracts, cloud fees, and every small licence renewal that hits the books throughout the year. Most Australian business owners could tell you their rent or their wage bill without blinking. Ask about total technology spend and the answer often turns into a shrug or a guessing game.

That gap matters more than it might seem. Technology now touches almost every part of how a business runs, from the tools your team uses each day to the systems that keep customer data secure. When nobody has a clear picture of total spend, it becomes far too easy to keep paying for licences nobody uses, duplicate the same tool across two departments, or miss an easy chance to negotiate a better deal with a supplier. Getting a handle on the numbers is the real first step towards spending smarter, not just spending less.

Don’t get us wrong, IT spending is not a bad thing, especially as businesses strive to compete and digitise. But with IT budgets growing each year, this money must be spent wisely where it will make a measurable difference to the growth and profitability of your business, not wasted on unnecessary upgrades or frivolous services. So, to help you reduce your IT spending while increasing your ROI and value for money, here are some tips from our team.

How to reduce your business’s IT costs

#1 – Reduce personnel costs

Ironically, the largest IT expense most businesses face is not tech, but people! Of course, there’s a worldwide IT skills shortage that’s making talent scarce and expensive, but even if there wasn’t, it’s still incredibly costly to fund, run, and manage a highly-skilled department. One of the most effective ways to reduce these costs is to outsource some or all of your IT needs. An experienced provider can supply you with the skills, expertise, and infrastructure your business needs at a fraction of the time, effort, and cost of running this department in house.

#2 – Use cloud data storage

On-site data storage carries heavy costs and risks, so if it’s not necessary for compliance or operational requirements, it’s time to move your data to the cloud. This means that your data can be securely backed up to multiple offsite data centres that provide encryption, specialist data security, and data backup solutions for your use, ensuring that all best practices are followed, and risks are minimised. By leveraging their systems and services, you can reduce personnel costs, IT infrastructure costs, and more, especially when you use a pay-as-you-go model. It’s also easily and affordably scalable, allowing you to create more storage or add functionality instantly.

#3 – Declutter software licences and consolidate platforms

Software clutter costs money, so have your systems fully audited and remove licenses that you’re not using. It can be a surprisingly considerable saving, especially if you look for expensive software being used for small functions and opportunities to shift these functions to new software applications for an improved ROI. Old and underutilised licenses can be cancelled and IT software streamlined, helping to justify the move to newer, more integrated, and more functional solutions at a fraction of the cost. By consolidating platforms and services to a single platform, businesses show a marked improvement in time-to-market for new products, agility, security, and innovation.

#4 – Utilising a managed services provider, not IT support

Managed service providers (MSP) and IT support providers aren’t the same things! While an IT support company is there to fix a problem when it occurs, an MSP prevents these issues from occurring in the first place. They can take over your entire IT department or work alongside your team, developing your IT strategy, monitoring your networks, offering 24/7 maintenance and troubleshooting, and building your IT infrastructure to meet custom and best practice standards.

How to Build a Simple Technology Spend Tracker

You don’t need expensive software to get visibility over your technology spend. A basic spreadsheet, updated once a month, is often enough to catch waste and spot patterns before they become expensive habits. The goal isn’t perfection on day one, it’s building a single source of truth that grows more useful every quarter.

Here’s a simple way to start building one:

• List every recurring cost first. Pull statements from the last three months and note every software subscription, cloud service, and support contract, including the renewal date and monthly or annual cost.
• Assign an owner to each tool. If nobody in the business can say why a licence exists or who actually uses it, that’s usually a sign it’s ready to be cancelled.
• Group costs by category. Split spend into buckets such as hardware, software licences, cloud and hosting, support and maintenance, and telecommunications so you can see where the bulk of the money actually goes.
• Flag renewal dates in advance. Set a reminder 30 days before any contract or licence renews automatically, giving you time to negotiate, downgrade, or cancel before you’re locked in for another term.
• Review the tracker every quarter. A tracker only earns its keep if someone actually looks at it. Block 30 minutes each quarter to compare current spend against the previous period and question anything that’s crept up.

Even a rough version of this tracker gives you leverage. Suppliers negotiate differently with a business that clearly knows its numbers, and your team makes better purchasing decisions when the true cost of “just one more tool” is visible in black and white.

At Otto, we’re not here to sell you an IT product – we’re here to be your IT department, and find the right ways to use IT in your business. We’ll design a system within your budget and designed for your operation, train your team, and make sure you have the best IT protection for your business. If your IT budget needs optimising and you want to understand your best options, talk to us today.

Frequently Asked Questions

How much should a small business spend on technology each year?

There’s no single figure that applies to every business, since it depends heavily on your industry, headcount, and how reliant your operations are on digital tools. Rather than chasing a benchmark percentage, focus on tracking your actual spend first, then assess whether each dollar is tied to a clear business outcome.

What’s the easiest way to start tracking IT spend if we’ve never done it before?

Start small. Pull your last three months of bank and card statements, list every technology-related charge you can find, and note the renewal date for each one. This alone usually reveals a handful of forgotten subscriptions worth cancelling straight away.

How often should we review our technology spend tracker?

A quarterly review strikes a good balance for most small and medium businesses. It’s frequent enough to catch waste before it adds up, without turning into yet another admin task competing for your team’s attention.

Can a managed IT provider help us reduce our technology spend?

Yes, this is one of the most common reasons businesses bring in a managed IT partner. An experienced provider can audit your existing licences and contracts, identify overlap or waste, and often negotiate better terms with vendors on your behalf.

What’s the biggest mistake businesses make with their technology budget?

The most common mistake is treating technology spend as a fixed cost that just happens, rather than an active budget line that gets reviewed. Without regular check-ins, subscriptions and licences quietly accumulate long after the business stopped needing them.