Most organizations start technology budgeting the same way. Someone opens last year's spreadsheet, adds a few percent to each line, and drops in a placeholder for whatever project leadership has been discussing. That approach works well enough when vendor pricing moves slowly and predictably. For 2027, it's an assumption worth checking.
Before anyone decides what to spend next year, a large share of the technology budget has already been set by agreements you signed, subscriptions that renew on their own, and equipment that keeps aging whether or not anyone plans for it. The useful work this fall is finding those commitments, understanding how they've changed, and then deciding what to do with what's left.
Renewals are moving faster than the spreadsheet
For years, adding 3 to 5 percent to software renewals was close enough. That's no longer a safe default. Zylo's 2026 SaaS Management Index found that 79 percent of IT leaders saw price increases at renewal over the past year, and 61 percent cut or delayed projects because of software costs they hadn't planned for. Research from Tropic found that renewals tied to new AI features came in 20 to 37 percent higher, compared with the 3 to 9 percent buyers were used to.
Much of this reflects real capability, often AI features that vendors are now building into the base product and pricing accordingly. The budgeting problem is timing. Those increases arrive at renewal, usually after the budget was approved, and by then the options are limited.
The Microsoft 365 change many organizations haven't felt yet
Microsoft raised list prices on most commercial Microsoft 365 plans on July 1, 2026. Business Basic went from $6 to $7 per user per month, Business Standard rose roughly 12 percent, and Microsoft 365 E3 moved from $36 to $39. Business Premium held at its existing price while picking up additional features.
For budgeting, the important detail is when the new price applies. It takes effect when a subscription is purchased or renewed on or after July 1. If your organization is on an annual term that renews next spring, you haven't paid the new rate yet, and last year's invoice will understate next year's cost.
It's also a good time to look at plan mix. Organizations that have stacked several security and management add-ons on top of Business Standard sometimes find that Business Premium covers the same ground for a similar or lower total, with those capabilities managed in one place.
Start with a renewal calendar
The most useful thing you can do before budget meetings is build a single list of every technology agreement, with its renewal date, term length, notice period, current cost, and internal owner. Most organizations can assemble it in an afternoon from accounting records and a handful of vendor portals. Three things usually come out of the exercise.
The first is notice windows. Many agreements renew automatically unless you give 30, 60, or 90 days' notice. If you want to renegotiate or change plans, that decision has to be made before the window closes, which can be months ahead of the renewal date itself.
The second is licenses nobody is using. Accounts for people who have left, shared mailboxes sitting on paid licenses, and seats purchased for a project that wrapped up last year all add up. Trimming them is usually the fastest way to offset a price increase.
The third is software bought outside of IT. Zylo's research found that business units, rather than IT, control about 81 percent of software spend in larger organizations. Smaller firms see the same pattern at a smaller scale, such as a marketing tool on someone's company card or a scheduling app a department signed up for on its own. Those costs belong in the budget, and the tools belong in your security review.
Separate what's committed from what's a decision
Once the calendar exists, sort the budget into two groups. Committed costs are the things you'll pay unless someone takes deliberate action, including subscriptions, managed services, support contracts, and connectivity. Decisions are the items leadership actually gets to weigh, such as new projects, upgrades, additional security controls, and AI pilots.
This split changes the conversation in the room. Instead of debating one large total, leadership can see that most of it is already spoken for, adjust the committed portion through renewals and right-sizing, and spend their time on the choices that move the business forward.
Three lines that are easy to leave out
Hardware refresh is the first. We plan around a four-year replacement cycle for laptops and desktops. Replacing roughly a quarter of the fleet each year keeps the cost steady and avoids the year when everything ages out at once. A budget with no refresh line tends to produce a large unplanned one later, and how devices come in and leave matters as much as when (hardware lifecycle management covers that side).
Cyber insurance requirements are the second. Carriers continue to add conditions at renewal, including phishing-resistant MFA, endpoint detection and response, tested backups, and a documented incident response plan. If your policy renews next year, read the current application now. Any control you don't have yet is a budget item, and it's much easier to plan for in October than to rush in the weeks before a policy expires.
Compliance work is the third. A SOC 2 audit, a bank examination, or a client security questionnaire with real requirements behind it carries costs for tooling, evidence collection, and staff time. It deserves its own line rather than an assumption that it will fit inside day-to-day operations, the same way compliance automation still needs people and process behind it.
Leave room for the year to happen
Every year brings something nobody planned for, whether it's a vendor acquisition that changes pricing, a key application that needs replacing, or a new requirement from a client. A modest technology reserve, set aside and owned by someone with the authority to use it, keeps those events from turning into a choice between delaying a project and going over budget.
AI deserves a specific mention. Most organizations will spend something on it in 2027, through Copilot licenses, AI features bundled into tools they already use, or a dedicated pilot. We'd suggest budgeting it as a defined experiment with a small group of users and a clear question to answer, then deciding on a broader rollout once there are results to look at.
Budget season is one of the few times each year when technology gets a dedicated conversation with leadership. Walking into that meeting with a renewal calendar and a clear line between committed costs and real decisions makes it a far more productive one. It's part of how we approach IT consulting generally.