October is when finance asks for next year's IT numbers. In a lot of $10M to $30M companies, the first draft comes from last year's total plus a percentage, with a few requested projects added on top.
That method misses costs that are already committed. Contracts renew on set dates. License counts change with headcount. Hardware reaches the end of support on a schedule. A build that starts with contracts and renewal dates gives leadership a total they can check against source documents.
Start with what is already committed
Pull every IT contract and subscription into one list. Include your MSP agreement, Microsoft 365 or Google Workspace, line-of-business applications, phone system, internet circuits, security tools, and backup services.
For each item, record the vendor, the cost, the renewal date, the notice period for changes, and any price increase written into the agreement. Many agreements renew automatically, and some require 60 or 90 days of notice. A renewal in February with a 90-day notice window is a decision for this quarter.
Compare license counts to your current employee list. Companies often pay for accounts assigned to former employees, duplicate tools that cover the same job, and premium licenses assigned to people who use basic features. Finance can verify each line against an invoice or a signed agreement.
Add hardware that reaches end of support
Use your device inventory to list hardware by age and support status. Laptops, servers, firewalls, and wireless equipment all have dates when the manufacturer stops providing updates or replacement parts.
Group replacements by quarter. A firewall that loses support in March belongs in the first quarter plan, with time for selection, ordering, and installation. A group of laptops purchased in the same year will reach replacement age together, and spreading those purchases across the year requires an early start.
Put security and insurance requirements in the plan
Review the questions your cyber insurance carrier asked at the last renewal, and any security requirements from customers. Each yes answer on those forms carries a cost to maintain, and each planned improvement carries a project cost.
Common line items include multifactor authentication, endpoint protection, email filtering, backup services with restore testing, and logging tools. Add training time for staff and testing time for your IT team or MSP. License cost alone understates the full cost of a rollout.
List deferred security work with a date attached. Assign the owner, the quarter, and the amount, or record the decision to accept the risk and share that record with leadership.
Count planned headcount changes
Ask department leaders for hiring plans by quarter. Each new employee adds a device, software licenses, setup time, and training time. Each departure returns equipment and frees licenses that can be reassigned before new ones are purchased.
Include role changes as well. A move into a role that handles finance, HR, or customer data can require different licenses and different access controls. Building those costs into the hiring plan keeps onboarding from becoming a series of small unplanned purchases.
Set a contingency line from your own history
Add up unplanned IT spending from the last two years. Look for failed equipment, emergency vendor help, urgent license purchases, and project overruns.
Use that average to set a contingency line for 2027, and track spending against it during the year. A contingency based on your own records is easier to explain to finance than a round percentage added at the end, and it shows leadership how often unplanned work occurs.
Build order for this week
First, gather contracts and renewal notices and build the committed list. Second, pull the device inventory and mark support end dates. Third, add security and insurance items with owners and quarters. Fourth, add headcount plans. Fifth, total four categories: committed costs, required replacements, planned projects, and contingency.
Bring those four totals to the budget meeting. Each total traces back to a contract, an inventory record, a requirement, or past spending. That structure lets leadership make decisions line by line, adjust timing by quarter, and see the effect of each cut before the year starts.
Not sure where your IT really stands? Start with a Clarity Audit: a focused assessment of your backups, security, vendors, and AI readiness. It's the first step in every engagement I take on.
About the author: Chris McGlasson is a fractional CIO and the founder of ClearStack Advisory, where he helps mid-market companies build AI governance, IT strategy, and technology roadmaps without the overhead of a full-time CIO. He previously built and sold LANPRO Systems, an IT services firm serving 350+ enterprise clients.