Key Highlights
- Invest in a security-first culture and continuous assessments to reduce human-driven risk exposure.
- Plan hardware life cycle refreshes every four years. Reassess software, SaaS, AI tools and third-party risk quarterly or biannually.
- Build a rate case that directly links IT investments to enterprise growth priorities like expansion, customer experience, AI enablement and regulatory readiness.
- Consolidate vendors and clarify risk ownership — never outsource oversight.
Strategic IT budgeting is more than an exercise in cost containment; it's a capital allocation decision about risk, resilience and growth. CTOs, CISOs and IT leaders creating IT budgets must weigh numerous challenges and opportunities that directly impact the business, including personnel, hardware, software and security measures. But resource allocation is just the start. Successful information technology leadership must also communicate to stakeholders how each line item directly impacts the organization’s mission and longevity.
Assess fixed and variable costs, invest in culture
IT budgeting starts with separating fixed costs, such as salaries and software licenses, from variable costs, such as cloud usage and support. CISOs and CTOs should review all hardware and software regularly to identify any outdated, underutilized or near end-of-life systems. They should budget for security and compliance (firewalls, endpoint protection and training), and earmark approximately 10% to 15% of the budget as a contingency fund for unexpected emergencies.
Chuck Brooks, president of Brooks Consulting International, says that many organizations, especially in his area of cybersecurity, suffer from misaligned or inadequate budgets. He says CISOs often lack direct budget control despite rising threats, regulatory pressure and board expectations.
“Strategic budgeting is essential because cyber risks are growing fast. Vendor-related breaches, shadow AI and OT/IT convergence are driving major incidents,” Brooks says.
Shadow AI, or the unauthorized use of AI tools outside IT governance, presents significant data leakage and compliance risks.
Pierre Bourgeix, CEO of ESI Convergent, works with companies in critical infrastructure and major utilities. He argues that keeping the company’s culture informed and knowledgeable about IT security is part of the cost of doing business and essential to protecting data.
“I would say that is one piece of the budget that you’ve got to put money into. Culture will destroy tech if it’s not properly positioned,” says Bourgeix.
Security culture must be funded like any other control, including initiatives like phishing simulations and awareness training.
Determine life cycle refresh
Strategic IT budgets include planned hardware life cycle refreshes for servers, laptops and networking equipment.
Today, CTOs not only consider the lifespans of computers, switches and systems, but also continually reevaluate technology and develop new processes such as AI. Bourgeix says that a six- to seven-year equipment check-in is now closer to four years from a cost management standpoint.
He recommends building a more nimble, cloud-ready architecture that can be secured. “Start with four years. Look at the sensitive infrastructure you’re making money with and verify that the infrastructure is up-to-date. In some cases, you might make decisions yearly.”
Validation costs protect from future threat events. Bourgeix cites Volt Typhoon’s widespread reach on critical infrastructure.
“Own the liability and determine an acceptable level of risk. This needs to be accounted for and communicated to stakeholders,” he says.
Tech leaders are not just creators of tech budgets; they should be part of the broader leadership and business discussions.
Outsourced systems, open-source tools
Healthy IT budgets will typically combine closely monitored outsourced systems with in-house expertise. When creating a budget, it’s essential to inform organizational leadership which area of operations is most important for outsourcing and why.
Free or open-source tools can be a force multiplier, as long as they are well-vetted and maintained. Bourgeix says there’s nothing wrong with companies utilizing open source tools, as long as they’re maintained and IT leaders do their due diligence.
“Validate it. Ask the questions, make sure they’re backed up correctly, and follow U.S. (or EU) standards,” he says.
Don’t assume that a tool provides a blanket solution, he warns. It’s critical to validate architecture fit, security posture and architectural alignment before adoption.
“It is OK to outsource specialized tasks, or outsource items when resources are limited — but never outsource risk oversight,” says Brooks. “Building strong in-house capabilities is important for control and alignment within an organization.”
IT leadership, take note: “Vendor sprawl” increases complexity, attack surface and third-party risk, while consolidation cuts overhead, improves efficiency, enhances interoperability and strengthens security.
Tie the budget directly to value
Often, IT departments are viewed as “cost centers” that demand larger budgets with no return on investment. Making a rate case for technology helps explain how the tech delivers value to an organization through efficiency gains and risk mitigation.
CTOs and CISOs should meet with stakeholders to understand the company’s goals for the coming year, whether that is expansion, improved customer experience or AI integration. Then, they can directly map IT to value by prioritizing projects that directly support these goals.
“One of the things we in IT don’t do very well is show the problem, and one of the things I tell every CTO is ‘Do not constantly be a doomsayer,’" says Bourgeix. Instead, he says, CTOs should show the impact of an initiative on the larger business goals. For example, ensuring the business will not succumb to a potential cyber threat.
“If it takes spending money on a third-party assessor to help you, then do it,” he says. “Most people who are running an organization (including IT teams) cannot silo themselves away from the business.”
Ask the hard questions
IT budgeting goes beyond last year’s costs; it requires aligning technology investments with growth, efficiency and strategy. And tech leaders are not just creators of tech budgets; they should be part of the broader leadership and business discussions.
Bourgeix says that years ago, his clients would call him for help with building architecture, vulnerability assessments or penetration testing.
“They’re not asking those things anymore,” he says. “They’re asking the hard stuff, like ‘How do I build identity management across my organization?’ ‘How do I build infrastructure that supports OT’ and ‘How do I show the why of what I’m doing and what it’s going to solve for the business?’
“That’s the strategy behind all the tactics.”
About the Author
Sara Scullin
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Sara Scullin is an award-winning freelance writer in Fort Atkinson, Wisconsin, with years of experience developing high-impact content that helps drive innovation and positive change. She is passionate about helping brands translate complex technical solutions into insightful takeaways for busy industry professionals.
Her work, which blends technical information with compelling narratives, has been featured in industry publications like Specialty Fabrics Review, VehicleServicePros.com and Officer.com. Sara prides herself on being a reliable content partner who consistently develops original, quality work on time, allowing her clients to focus on core business growth.
Some of the topics she has covered include B2B tech, manufacturing, and leadership trends across textiles, agriculture, automotive aftermarket and public safety industries. When she is not covering industry movers and shakers, Sara enjoys hiking and exploring with her family and dog, Ginger.
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