There’s a question that keeps coming up in boardrooms across Australia: how much should we actually be spending on technology? The answer, frustratingly, is that it depends. But let’s try to get more specific than that.

The Benchmarks Everyone Quotes

Gartner’s annual IT spending surveys suggest most companies spend somewhere between 3% and 8% of revenue on technology. Financial services firms tend to sit higher — closer to 10%. Manufacturing and retail often land around 3-4%. These numbers get thrown around a lot, but they’re averages, and averages can be misleading.

A company spending 8% of revenue on tech isn’t automatically doing better than one spending 3%. What matters is whether that money is producing results. Are your systems actually helping people work faster? Are they reducing errors? Are customers having a better experience because of them?

If you can’t answer those questions clearly, the percentage doesn’t matter much.

The Real Cost Isn’t the Software

Most businesses underestimate the true cost of technology adoption. You buy a $50,000 platform, and you think that’s the expense. It’s not. The real costs show up in training, integration, migration, ongoing maintenance, and — most commonly overlooked — the productivity dip that happens while people learn new systems.

According to McKinsey, large IT projects run 45% over budget and deliver 56% less value than predicted. That’s not a minor rounding error. It’s a pattern that should make every CFO pause before signing off on the next big platform purchase.

One approach that’s gaining traction is working with specialist consultants who can audit your current stack before recommending new purchases. One company doing this well focuses on matching AI and automation tools to actual business needs rather than pushing the latest shiny product. That kind of pragmatism saves money in the long run.

Start With the Pain Points

Instead of starting with a budget number, start with the problems. Where are your people wasting time? What processes break down regularly? Where do customers complain most?

Map those pain points first. Then look at what technology might fix them, and what that technology actually costs — including implementation time and training. This gives you a much more honest picture than picking a percentage and working backwards.

Here’s a rough framework:

• Under $2M revenue: Keep it simple. Cloud-based accounting, a basic CRM, and good communication tools. Budget $20-40K per year.
• $2M-$10M revenue: You’ll need more structure. Think project management platforms, proper cybersecurity, and possibly custom integrations. Budget 4-6% of revenue.
• $10M+ revenue: At this stage, the question shifts from “what do we need?” to “what’s holding us back?” Expect to spend 5-8% of revenue, with a chunk going to data infrastructure and security.

These aren’t hard rules. They’re starting points.

Where Australian Businesses Get It Wrong

I’ve seen a few patterns that repeat across Australian SMBs:

Buying enterprise tools for small teams. A 15-person company doesn’t need Salesforce Enterprise. HubSpot’s free CRM or Zoho might do everything you need at a fraction of the cost.

Ignoring security until something goes wrong. The Australian Cyber Security Centre reports that cybercrime costs Australian businesses over $33 billion annually. Spending $5,000 a year on proper security is cheap insurance.

Treating tech as a one-off purchase. Technology is ongoing. You need to budget for updates, renewals, and eventual replacements. That shiny new system you buy today will need replacing in 5-7 years.

Following trends instead of needs. Not every business needs an AI strategy right now. Some do. But if your biggest problem is that invoices get lost in email, maybe fix that first.

The Question You Should Actually Ask

Instead of “how much should we spend on tech?”, try asking “what’s the cost of not fixing this problem?” If a manual process is costing you 20 hours a week in staff time, that’s real money. If slow systems are driving customers to competitors, that’s real revenue loss.

Technology spending should be driven by outcomes, not by what your competitors are doing or what a vendor tells you is industry standard.

Get specific about the problems. Get honest about the costs. And don’t be afraid to spend less than the benchmarks suggest if your business genuinely doesn’t need more right now. The best tech budget is one that pays for itself.