IT Cost Reduction  for Architecture Firms In 2020

  • February 22, 2019
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  • Posted by Kevin Gemeroy

As your firm grows and matures, one of the critical practices of running a successful business is the art of IT budgeting through effective managing. While it may only be the finance folks that get excited about this sort of thing, it’s important to do religiously. Just as you wouldn’t start a new construction project without a solid budget, you shouldn’t run your architecture firm’s multi-million dollar operation without one either.

1. Capital vs. Operating Budget

Something we see regularly among small architecture firms is they combine (and often confuse) capital vs. operating budgets. Just as the cost to build a building differs from the cost to operate it, you need to separate the cost to“build”your IT system from the routine costs to maintain it for the best IT cost reduction.

A capital budgeting process should include major purchases such as workstations, servers, network gear, etc. These typically show up on the balance sheet as a fixed asset. These assets are usually depreciated over time (sometimes as a Section 179 expense) and have to be replaced on a routine basis. Major software purchases for new software packages (that aren’t subscription based) should also be included in your capital budget.

In contrast, operating budgets contain the routine costs for labor, services, tools, or small consumables that don’t warrant being capitalized. Your operating IT budgeting should contain all internal labor costs (loaded for taxes and benefits), outside vendors/services, software subscriptions, tool costs, and any consumables (things like USB cables, replacement keyboards and mice, etc.).

2. Building Your IT Capital Budget

Here are a list of things that should be included in your capital IT budgeting so you can save money:

Workstations- purchases for new employees and routine replacement for current ones.

Servers - if they’re located on-premise (at your location) or in a private datacenter where you own the equipment.

Network Gear - things like switches, firewalls, wireless access points, batteries, and anything else that provides a centralized network service.

Printers/Plotters - if they’re purchased from a vendor instead of leased, these should also go in your capital budget.

Peripherals - things like scanners, monitors, and more. While some companies expense these since they’re smaller items, they still need to be replaced on a routine basis. And if you’re replacing 50 monitors in a year, that’d definitely have an impact on the bottom line.

The next step and best practice for  building your capital IT budgeting is to estimate replacement costs and schedules for each of these items. Here are some rough guidelines for the costs we typically see for architecture firms:

Workstations - Costs vary widely depending on function. A good business-class workstation for an SG&A (sales, general, and administrative) employee usually costs between $1000 and $2000, depending on options. 

CAD Workstations start around $3000 and can exceed $5000 depending on options. The graphics card is a big factor here, as they can range from $200 for an entry-level gaming card to over $1000 for a high-end Quadro card. We generally recommend that our architecture clients purchase mid-range Quadro cards (since they’re CAD certified), but many opt to use higher performance gaming cards that come at a lower cost.

Stay away from cheaper options that you’d find at a big box retail store or in a mail-order catalog. If you go with the big brands, make sure you buy their business-class models (OptiPlex/Latitude for Dell, Pro/Elite/Z for HP, etc.).

If you go with custom CAD workstations, don’t buy your PCs from a local PC shop. It’s best to stick with big brands that have consistent product lines and solid production standards (Dell, HP, Lenovo, etc.) or find a company that specializes in custom-building high-end PCs (Equus Compute Solutions, Puget Systems, etc.).

Workstations need to be replaced on a regular basis to keep up with new software needs and to stay working as intended. We typically recommend 5 year replacement cycles for standard workstations, and 4 year cycles for laptops and CAD workstations. 

Include an on-site warranty, preferably tied to the replacement cycle.Repairs can be expensive and ugly and parts aren’t always available 4-5 years down the road.These typically cost $200 - $400 depending on the price of the device.

Some companies opt to replace machines slightly sooner to smooth out budgets from year to year. We don’t recommend pushing past 5 years as we’ve noticed a significant increase in the number of problems with workstations that exceed 5 years of age.

Don’t forget  IT budgeting for labor costs. It usually takes 3-6 hours per machine to build the configuration, load all software, transition the user’s settings and move any data from their old workstation. 

Servers - Most of our architecture clients still use on-premise servers for a few reasons. The big concerns are cost (cloud servers are expensive by comparison), performance (local networks are faster than pushing data to/from the cloud across an internet connection), and software requirements (most architecture firms use multiple line-of-business software applications such as AutoCAD that integrate with other applications).

Servers vary widely in cost. They start around $5,000 and can exceed $25,000 depending on specs. Storage is the biggest cost variable. More storage means a higher cost, and faster storage (enterprise-gradeSSDs) are far more expensive(and far superior) than rotational hard drives.

Most of the on-premise servers we use for architecture firms range from $8,000 to $15,000. That cost is for the hardware alone. There is also licensing cost and labor costs that can range from a couple thousand dollars to over $10,000 depending on what’s required to do the migration.

The best practices for replacement of servers is  the same (roughly) 5 year schedule as most workstations. Servers are even more important to keep up and running at optimal performance than workstations, as a server outage can impact the entire company.

Overall, most physical server replacement projects cost somewhere between $10,000 and $30,000 per server when factoring in all costs. 

Network Gear - Network gear consists of anything that connects to your network and provides a central service.This includes things like switches, firewalls, wireless access points, battery backups, power distribution units, and more.

Switches generally start around $1000 for a 48-port model and can be as much a $3000 for POE models that have more advanced capabilities or support fiber modules.They also take a few hours of labor per switch to configure and install.

Wireless access points range from $300 to $1000 depending on features, strength, and range. Most of the access points we sell are in the $400 to $700 range and cover an area that’s approximately 2000 to 3000 square feet. They also take a few hours each to install, configure, and test unless they’re centrally managed by a controller, in which case more time is spent up front to configure the controller, and less time is required for each access point.

Firewalls range widely in price.They start around $500 and often cost more than $5000.They are sized differently based on the size of the location, employee count, and bandwidth needed as more people = more traffic = bigger firewall. They also require a few hours per firewall to install.

Batteries and power distribution units also vary widely in price based on need. A simple battery backup for a single server is only around $600. While larger models that run full racks can run into the thousands (or more if you’re in a more rural location that’s prone to power outages). It would be easy to spend $5000 to $10,000 on battery backups and power distribution units, especially if you were located outside of a city center and didn’t have power cleaning systems in your building.

All network gear needs to be replaced on a schedule as well. We typically recommend 5-7 years for switches, firewalls, and wireless access points. Batteries need to be replaced more frequently - every 2 years or so for the battery module, and every 4 to 5 years for the main unit.

Printers, Plotters & Peripherals - These are pretty variable from device to device. Good quality laser printers can last 10+ years, while plotters may need to be replaced more often.Your printing vendor can do a better job of helping you cut costs and budget  for these items, but the key is not keeping them around forever. Anything that plugs into a network should have an“expiration date” at some point down the line.

Finally peripherals like monitors and scanners often outlive the workstation they’re attached to. We usually recommend replacing monitors every 10 years or so (or roughly every other computer replacement). Remember not to be tempted to buy the cheap monitors…when you’re looking at CAD drawings all day, it’s worth a couple hundred extra bucks to get the enterprise grade models with features like height adjustable stands and better color correction. 

3. Building Your IT Operating Budget

Believe it or not, this is actually the harder of the two! Here are some best practices on how to come up with an accurate IT operating budget while still cutting costs.

Labor costs. Take the % of the time spent by your internal employees on IT. Multiply that by their annual salary to come up with a base number. Then tack on your taxes and benefits load (usually20-30%) and don’t forget to do the same with the time you’re spending managing any internal IT employees. 

Outside services. This would be the cost for things like outside consultants/contractors or vendors. If you have one or two internal employees responsible for IT, you’re still in need of a good vendor team to support them and do the things that it’s not efficient for them to do. If you outsource your IT to a small IT shop or managed IT services provider, this will be your biggest line item. A good budgetary number (to be safe) is around $2500/user/year for routine costs if you outsource to a MSP.


Software subscriptions. This should include your email platform (O365/GSuite usually), Office licensing, CAD, and other line-of-business software subscriptions. Some of these costs will be included in an MSP’s service plan, so this number will typically be lower if you outsource than if you hire internally. The overall number varies widely from company to company, but it’s usually not less than $50/user/month (excluding the CAD licensing) and not much more than $250/user/month (if your CAD and other line of business applications are included). 

Tool costs. This would cover items like your endpoint security software (aka anti-virus), backup software, monitoring software, and remote control software (just to name a few).These are generally included in an MSP’s subscription cost and they often get a much better deal by buying in bulk than you would by buying directly from the software vendor. Be very, very cautious in this area if you have internal IT employees. A good internal team will be asking for lots of tools so they can do a great job of everything that’s needed but still cut costs.