Dreaming Costs Money: How Mid-Market Business Leaders Should Think About Their Technology Spend

Introduction: The Dream Is Free. Execution Isn’t.

You’ve got a big vision—scale the business, improve customer experience, streamline operations, and maybe even use AI to stay ahead of the curve.

But then comes the pause:
“How much should we spend on technology?”
“What if it doesn’t work?”
“Can we afford to invest right now?”

If you’ve ever wrestled with those questions, you’re not alone.

Mid-market business leaders are under constant pressure to do more with less. Unlike large enterprises, you don’t have unlimited budgets. And unlike startups, you’re not burning investor capital—you’re playing with your own margins.

So you hesitate. You stall. You compromise.

But here’s the truth: dreaming without investing is a liability, not a strategy. And treating technology as a cost center instead of a value multiplier can quietly hold your business back from its next level of growth.

In this blog, we’ll break down:

• Why mid-market tech spend needs a strategic shift

• Industry benchmarks to help you calibrate

• A practical ROI-driven model for tech investment

• How to turn technology from an expense into an asset

Let’s stop treating tech like overhead—and start treating it like the growth engine it is.

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Part 1: The Technology Spending Paradox

Mid-market businesses often live in two extremes:

• Over-optimistic dreamers: “Let’s build it all—custom ERP, AI bots, mobile apps.” But they lack a clear ROI.

• Cost-conscious skeptics: “Let’s just make do with what we have.” But they don’t realize the hidden costs of inaction.
  

The result? A graveyard of half-finished projects or systems that hold back business performance.

Here’s the problem: most mid-market leaders haven’t been taught how to think about tech spending.

They treat it like marketing or office furniture—a line item to be minimized.

But technology is different. Done right, it can:

• Improve profit margins

• Increase customer lifetime value

• Speed up cash flow

• Enable faster scale with fewer people

• Even increase your company’s valuation
  

In other words, technology doesn’t just live on the cost side of your P&L—it belongs on the asset side of your balance sheet.

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Part 2: What Are Other Businesses Spending?

So how much should you actually spend?

Let’s break it down by industry and revenue range. These are broad benchmarks based on industry reports from Deloitte, Gartner, and CIO surveys.

Average IT Spend as a Percentage of Revenue

By Company Size (Annual Revenue)

Sources

1. Gartner (2023) – IT Key Metrics Data: Technology Spend by Industry and Company Size. Retrieved from www.gartner.com

2. Deloitte (2023) – Global CIO Survey: The Path to Value. Retrieved from www2.deloitte.com

3. Computer Economics (2023) – IT Spending and Staffing Benchmarks. Avasant Research. Retrieved from https://avasant.com/research/computer-economics/

4. Spiceworks Ziff Davis (2023) – The State of IT Report. Retrieved from https://www.spiceworks.com/marketing/state-of-it/

5. CIO.com / Foundry (2023) – State of the CIO Survey. Retrieved from https://www.cio.com/

So if your company does $25M in annual revenue, a healthy baseline IT budget could range from $500K to $1.25M, depending on your industry and growth ambitions.

That includes:

• Core systems (ERP, CRM)

• Infrastructure (cloud, networks, security)

• Product development (if you’re tech-enabled)

• Innovation initiatives (AI, automation, data platforms)

But here's the catch: it's not about how much you spend—it's how you spend it.

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Part 3: Build a Technology ROI Model (Not a Budget)

If you're only budgeting for tech, you're missing the point. You need to invest in tech the same way you invest in sales, talent, or real estate—with an ROI model.

Here’s a simple 4-part framework to evaluate whether a tech investment is worth it:

1. What Problem Are You Solving?

Start with business pain, not tech buzzwords.

• Are you trying to reduce inventory costs?

• Improve team productivity?

• Speed up your sales cycle?

• Decrease customer churn?

If the problem isn’t crystal clear, the tech won’t deliver clear results.

2. What’s the Potential Payoff?

Define the upside in dollar terms.

• “If we automate this process, we save 5 FTEs = $350K/year”

• “If we reduce churn by 3%, we increase CLTV by $500K”

• “If we improve quote-to-cash speed, we unlock $2M in working capital”
  

These aren’t guesses—they’re directional estimates to shape investment strategy.

3. What’s the Total Cost of Ownership (TCO)?

Don’t just look at license fees or development costs. Factor in:

• Implementation and training

• Change management

• Ongoing support

• Future upgrades or scaling costs
  

Now you have a realistic investment number.

4. What’s the Time to Payback?

The ROI formula doesn’t need to be complicated:

ROI = (Annual Benefit – Annual Cost) / Investment Cost

Most mid-market businesses should aim for:

• Payback within 18–24 months

• 3–5x ROI over 3–5 years
  

This model turns tech from a gut-feel decision into a boardroom conversation based on facts.

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Part 4: The Hidden Costs of Underspending

Trying to “save money” on tech can quietly hurt your business in ways you don’t always see:

1. Wasted Talent

Your best people waste time on low-value tasks because your systems are clunky or disconnected.

2. Customer Friction

You lose deals, delay onboarding, or miss renewals because your customer experience doesn’t scale.

3. Delayed Decisions

Without the right data, your leadership team flies blind or moves too slowly.

4. Increased Risk

Old systems are vulnerable to cyber threats, compliance gaps, or catastrophic downtime.

So while underspending may feel safe short-term, it creates compounding risk long-term.

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Part 5: Shifting Technology to the Asset Column

How do you start seeing tech as an asset—not just an expense?

Step 1: Treat Tech Like a Capital Investment

Just like equipment or property, technology should have a clear use case, depreciation schedule, and ROI.

Work with your CFO to track:

• Capitalized development costs

• Long-term amortization for platform investments

• Tangible value creation from automation or analytics
  

Step 2: Connect Tech to Valuation

Investors, PE firms, and acquirers increasingly value businesses based on:

• Operational leverage (doing more with less)

• Scalable infrastructure (cloud-native, automated)

• Proprietary technology (data assets, IP)
  

If your systems are manual, brittle, or dependent on people—you’re harder to scale and harder to sell.

If your systems are modern, integrated, and data-rich—you’re more valuable.

Step 3: Rebalance Your Budget Mix

Many mid-market firms spend 80% of their tech budget on keeping the lights on.

Flip the ratio.

Aim for:

• 60% core ops & maintenance

• 40% innovation, automation, growth-focused tech

This ensures you’re not just maintaining status quo—you’re building the future.

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Part 6: The Playbook for Smarter Tech Spending

Run This Exercise with Your Leadership Team:

1. List your top 5 business bottlenecks

2. Quantify the financial impact of each bottleneck

3. Brainstorm tech-enabled ways to address them

4. Build ROI models using the framework above

5. Prioritize initiatives based on payback, risk, and readiness

Then ask: what percentage of our revenue are we actually investing to remove these constraints?

If it’s under 2%—you’re probably underinvesting.

If it’s more than 6% but with no clear ROI—you’re probably overspending or misallocating.

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Conclusion: Spend Wisely, But Spend Boldly

Technology isn’t a cost to cut. It’s a lever to pull.

The most successful mid-market companies don’t necessarily spend more—but they spend smarter. They:

• Align tech investments with business value

• Use ROI models to prioritize

• Treat systems as growth enablers, not overhead

• See tech on their balance sheet—not just their P&L

So yes—dreaming costs money.

But with the right roadmap, the right metrics, and the right mindset, your tech investment isn’t a gamble. It’s your smartest bet.