How to help your clients with their cybersecurity budget for next year

According to our report exploring the state of cybersecurity for small and midsize businesses (SMBs) in 2024, most organizations (83%) are looking to invest more in their cybersecurity over the next year, with an average expected increase of 19%.

A huge increase in spending like this can be difficult to navigate, which is exactly why it’s so important for these businesses—and their strategic partners—to get it right. 

Crafting an effective cybersecurity budget is paramount for any organization, and this is one key way managed service providers (MSPs) can help their clients. As their primary defender, you can build comprehensive and adaptable budgeting strategies.

A well-structured budget doesn't just address immediate threats; it lays the groundwork for a holistic defense against evolving cybersecurity challenges.  

In this blog, we will identify best practices and factors influencing budget decisions and then provide an 11-step approach to ensuring client budgets align seamlessly with current and future needs. 

The importance of comprehensive budgeting 

MSPs are increasingly shifting from a tactical to a strategic approach, offering SMBs valuable guidance on both current and future cybersecurity defenses. To ensure adequate protection that matches a business’s specific needs, SMBs and MSPs need to understand the importance of proper budgeting. 

Without a well-defined IT budget, MSPs cannot effectively guide clients in making informed decisions about necessary, recommended, or desirable technology purchases for the upcoming year. Moreover, when MSPs don’t support budget-building activities for their clients, it can lead to the SMB’s leadership team implementing inadequate pricing adjustments, potentially hindering business growth and profitability. 

Ultimately, a well-structured cybersecurity budget is crucial to MSPs via their clients. 

What’s more, providing sound cybersecurity budget strategies positions an MSP as a true partner committed to their client’s success and growing alongside them. 

What impacts a cybersecurity budget? 

Many variables, like business sector, size, type of data, and network complexity, influence an organization's cybersecurity budget. With more organizations increasing their investments in cybersecurity, MSPs are properly positioned to increase the impact they made in the SMB community while also growing revenue, opportunities for internal teams, and profits! 

According to Gartner forecasts, global end-user spending on information security is projected to total $212 billion in 2025, an increase of 15.1% from 2024.  

Despite these commitments to added cybersecurity spending, breaches of corporate systems will remain a pressing concern, highlighting the need for a strategic, structured cybersecurity advice which must include a budget process to ensure businesses are aware of the solutions required for their specific organization. 

Several external factors and trends significantly influence cybersecurity budgets: 

• Regulatory changes: Updates to data protection laws can necessitate new compliance measures, requiring legal consultation and software updates. 

• Threat landscape: Dynamic cyberthreats such as ransomware or phishing attacks can lead to increased investment in advanced security solutions. 

• Technological advancements: The adoption of new technologies, such as IoT devices can create vulnerabilities, requiring updates to hardware or software. 

• Labor market: Fluctuations in the availability and cost of specialized cybersecurity talent can directly impact budget allocation. 

• Client complexity: As clients diversify their tech stacks or undergo digital transformations, increased complexity could require more robust security. 

• Vendor Integrations: Third party integrations can create immense cybersecurity risk for the SMB community.  Ensuring that connections are safe and protected is a critical step in the adoption process. 

Another overarching factor that has an outsized influence on cybersecurity budgeting is the industrial niche (both between industries and within different elements or focuses of a single industry).  

For example, an analysis of cybersecurity budgets in financial institutions found that the banking, capital markets, and insurance sectors had the lowest share of security spending relative to their total budgets. However, most respondents across the industry spent more on operations than capital. 

This all points to the importance of an intentional, comprehensive budget.  

Creating a cybersecurity budget 

To help your clients maximize their cybersecurity budgets, it’s important to first emphasize the process's complexity. After all, creating a well-balanced budget is complicated. It involves much more than simply allocating funds to various technologies and initiatives. 

The process requires a comprehensive approach that starts with a risk assessment, resource evaluation, and strategic alignment with overall business goals. Down the line, you’ll prioritize risks, estimate and allocate budget across major, significant areas, and streamline budgeting and overall management with efficient software. 

To successfully navigate these complexities for your clients, let's delve into each key aspect. 

1. Conduct a risk assessment and business impact analysis

Understanding the specific risks and needs for a specific organization can be challenging.  While a risk assessment and business impact analysis (BIA) may sound similar in nature, they complete two different tasks that help define a business’s cybersecurity needs.  

A risk assessment (like one provided by ConnectWise) is a systematic process used to identify, analyze, and evaluate potential threats and vulnerabilities that could compromise an organization's security. It provides a clear understanding of the likelihood and potential impact of these risks, enabling organizations to prioritize their security efforts and allocate resources accordingly. 

A Business Impact Analysis (BIA) is a process used to identify critical business functions, assess the potential impact of disruptions to those functions, and develop strategies to minimize the negative consequences. It's a crucial tool for understanding the potential financial, operational, and reputational risks associated with a security breach or other incident. 

Security threats pose variable risks—some may only induce minor disruptions, while others can incur severe financial or reputational loss. A keen understanding of these impacts helps you help clients make informed decisions and assure optimal security. 

2. Define business objectives and KPIs

Defining clear objectives around business growth and potential IT changes that are outside of traditional IT Support (line-of-business changes, new SaaS applications, potential mergers and acquisitions that may impact IT planning, and Key Performance Indicators (KPIs) is not just strategic planning; it's a fundamental step in effective budget allocation for cybersecurity. 

To ensure accurate budgeting, identify the cybersecurity risks unique to your client’s environment, as they will form the basis for their budgeting objectives. Budgeting in cybersecurity is more nuanced than merely setting aside a lump sum; it necessitates a strategic approach. Ensure your clients establish an annual budget incorporating regular financial reviews, aligning spending with evolving threats and objectives. 

Clients can use KPIs, such as ConnectWise Security360’s MSP Security Score which measures an organization’s security posture based on five categories: Endpoint, Network, Vulnerability, Identity, and Data. This comprehensive assessment empowers clients to take proactive measures and prioritize actions to minimize risk. 

Client cybersecurity goals can’t exist in a vacuum; they’re intrinsically linked to their overall business strategy. This ensures that cybersecurity investments also contribute to business growth and competitive positioning.  

One great way to ensure this is all on track is to implement quarterly business reviews (QBRs). These reports allow your team to examine client cybersecurity progress more closely and ensure that budgets are allotted in accordance with their business objectives. 

By tightly weaving objectives and KPIs into a cybersecurity budget, your clients have a financially responsible and strategically sound roadmap. 

3. Create an inventory of IT assets

A comprehensive inventory of your client’s IT assets is not just a cybersecurity best practice; it's a cornerstone for cost-effective budget allocation. The inventory should include all assets—software, hardware, networks, and data—as these serve as the pillars of your cybersecurity strategy. 

Begin by categorizing IT assets based on their critical and sensitive nature. Recognizing the varying degrees of value and risk among assets enables you to help your clients prioritize their cybersecurity investments more wisely.  

It's imperative to go beyond creating an initial or static inventory. Continual Discovery allows clients to adjust their budget allocation in real-time, responding to changes in the IT environment, business strategy, and emerging threats. 

Being precise with an IT asset inventory leads to more accurate budgeting, enables cost reductions where needed, and ensures that essential items receive the financial resources required for optimal protection. 

4. Prioritize risks

While a comprehensive IT asset inventory informs clients of where they are currently allocating resources, prioritizing risks makes budgeting forward-looking. Guide your clients to allocate funds based on detailed risk-based vulnerability management, zeroing in on the most critical vulnerabilities with the highest potential impact. 

Risk prioritization isn't solely about setting aside finances; it's an exercise in strategic expenditure. Address only the most high-impact risks first to optimize your investment and secure the most vulnerable aspects of your client's operations. 

This focused approach will yield greater ROI on their cybersecurity spending. 

A client’s risk landscape isn't static; it morphs with new threats and vulnerabilities emerging. A dynamic financial strategy is key: regularly reassess risk priorities and suggest adjusted budget allocations accordingly. This ensures client cybersecurity measures stay agile and cost-effective in combating evolving threats. 

5. Allocate budget for various resources

Effective cybersecurity depends on a well-considered, strategically allocated budget that spans various key areas: infrastructure, personnel, training, tools, and third-party services. A well-balanced budget does more than address risks; it positions clients to proactively address threats. For example, while investments in infrastructure secure the networks, budget allocation for training fosters a culture of security awareness. 

In terms of personnel costs, the Bureau of Labor Statistics notes that cybersecurity analysts earn an average salary of $119,860 per year. This doesn't include additional expenses like benefits and specialized training, which can help provide a faster return on investment (ROI) when purchasing cybersecurity services through your MSP vs hiring internally. 

Retention can also be challenging, especially for the most hotly sought-after roles like chief information security officers (CISOs). Roles like analysts and incident responders are not just job titles but the first and last line of defense against significant system breaches. Consequently, their ongoing training on the latest threats and defense mechanisms is crucial.  

MSPs can reduce client spending in this area by supplying their specialized expertise on a fraction or service basis, providing additional support hours when needed.  

6. Estimate costs for technology and tools

Technological innovations are vital in cybersecurity. The increasing complexity of the digital landscape demands a wide range of new tools, including security software, firewalls, intrusion detection systems, and alert & log management tools. 

In cybersecurity budgeting, it is vital to consider the long-term financial implications of tools and services, not just the upfront costs. Account for ongoing licensing and maintenance fees, as they can significantly impact the total cost of ownership. 

For MSPs, aligning with partners offering cost transparency is crucial for helping clients with accurate budget planning. Affordability at the point of purchase could be deceptive; recurring payments for licenses and updates may, over time, eclipse initial costs, making a total expenditure analysis imperative. Investing in quality, comprehensive suites like a security information and event management (SIEM) with an attached security operations center (SOC) can lead to long-term protection and savings.  

7. Allocate funds for training

Cybersecurity extends beyond tools and technologies; it is pivotal to ensure that users are knowledgeable and vigilant. Encouraging your clients to invest in employee cybersecurity training strengthens an organization's defense against cyberthreats. 

Training can range from detailed workshops on specific threats to certifications that affirm an employee's cybersecurity proficiency. Human error is often a primary entry point for cyberattacks. Allocating funds to train client staff on recognizing phishing attempts and social engineering schemes offers a high return on investment. 

A budget-focused perspective on training becomes paramount. 

Likewise, with the increasing use of personal devices in corporate settings, budgeting for education on device security is non-negotiable. Additionally, a focus on physical security—like secure storage of devices and documents—merits its budget line item to prevent unauthorized data access. 

8. Create a contingency fund

Clients should establish a contingency fund within their budget for unforeseen incidents and emerging threats. Even with robust capabilities to detect and remediate various cybersecurity threats, expecting the unexpected is important. 

A contingency fund becomes indispensable when dealing with such uncertainties, providing a funding source that can enable rapid intervention in worst-case scenarios. 

Setting aside resources for unexpected expenses like security breaches or sudden infrastructure failures allows you to support your clients with specialized services like the ConnectWise Incident Response Service. ConnectWise provides real-time incident management and post-incident monitoring, ensuring you can quickly return your client to normal operations. 

9. Get approval from key stakeholders

Cybersecurity decisions impact the entire organization, so it is vital to present budget proposals to key stakeholders across various departments. Their diverse views on the company's priorities, risks, and financial standing make their input invaluable. 

When presenting the budget, clients need to clearly convey the reasoning behind each allocation. Detail the costs, benefits, and expected returns. For example, stakeholders should understand how new security software mitigates threats, its advantages, and its alignment with overall cybersecurity policies. 

These discussions also need to highlight the organization's overarching benefits, such as averting direct losses from breaches, safeguarding the company's reputation, and ensuring compliance through proactive budgeting. 

MSPs can play a vital role here by taking complete technical insights and making them accessible, actionable information that highlights different benefits for specific departments or niches—soundbites that appeal to different audiences. 

10. Leverage cloud solutions

You're at the forefront of protecting your clients. Encouraging them to embrace cloud solutions can offer a significant edge. These cost-effective platforms grant unparalleled flexibility and scalability compared to traditional on-premises systems.  

Adopting cloud solutions can be strategic, minimizing costs and maximizing operational benefits. Cloud platforms provide scalable services that adapt to your needs, allowing SMBs to manage costs during digital transformations. 

When conducted under essential cybersecurity practices, cloud migration mitigates pitfalls like data loss and non-compliance fines. Encouraging your clients to move toward the cloud is a prudent budgetary choice. It positions your client's business for sustainable, long-term financial planning—with your help. 

11. Regularly review the cybersecurity budget

Budgets are always going to change. From accounting for new threats to new staffing needs to new resources, a client’s budget will never be set in stone. 

The first step in creating an adaptive budget is a regular review cadence. 

Your team and your client’s internal team should know if the budget meets their needs. This means measuring risk calculations, losses, and savings against other financials of the organization. And, if anything needs to be adjusted, you need to know what resources and pathways are available to make those necessary changes. 

For MSPs looking to help client organizations further fine-tune their cybersecurity initiatives, ConnectWise resources can offer a wealth of information. In particular, our guides, designed to align with the challenges and opportunities in the current MSP landscape, focus on critical operational and strategic planning elements, serving as an instrumental resource for those striving for excellence. 

Secure your clients 24/7 with ConnectWise

Cybersecurity solutions support streamlined budget optimization by providing multi-functional and scalable tools that adapt to evolving threats. This ensures clients’ digital asset security and long-term financial efficiency. 

When selecting cybersecurity solutions, opt for integrated platforms like unified threat management. This consolidates multiple security functions—firewalls, intrusion detection, and antivirus—into a single platform. It cuts down on manual monitoring and associated costs, giving your clients more value for their MSP spend. 

To make an informed investment, experiencing the solutions firsthand is crucial. 

Resources like cybersecurity software demos and our ConnectWise Cybersecurity Center offer a practical opportunity to explore these multi-functional tools. Though these guides aren't solely geared toward budgeting, they provide a comprehensive view of features contributing to a cost-effective cybersecurity strategy.