IT Budget Planning for 2027: A Guide for Ontario Businesses

Most IT budgets get built by copying last year’s numbers and adding a few percent. For 2027 that approach will come up short, because several costs are changing on dates Microsoft has already published. This guide is part of our MSP buyer’s guide for Ontario businesses, and it walks through what to put in the budget, which 2027 deadlines force spending, and how to keep the number honest.

I’m Adam Bowles, Partner and CEO of ACT360. We sit down with clients every fall to plan the coming year as part of our managed IT services, and the same questions come up each time.

An IT budget covers everything you pay to keep technology running and to change it: subscriptions, support, hardware, security, backups, planned projects and a contingency. Separating running costs from project costs is the step most businesses skip.

If you’re still working out what support should cost, our guide to IT support costs for Ontario businesses breaks down what drives a quote.

The big one is Windows Server 2016, which reaches end of extended support on January 12, 2027. Windows 10 extended security updates also double in price for their second year, and SQL Server 2017 ends in October 2027.

Dates come from Microsoft’s 2027 end-of-support list, the Windows Server 2016 announcement and the 2025 list.

On Windows 10: Microsoft’s Extended Security Updates page sets Year One at US$61 per device and says the price doubles every year, for up to three years. It’s cumulative, so a business that joins in Year Two pays for Year One as well. Take 20 PCs that skipped Year One: that’s US$61 plus US$122 per device, about US$3,660 before tax, to keep them patched one more year. That example is ours, for illustration, but the math is why replacement usually wins.

An old server is often the bigger decision. Before you price a replacement, read how a 35-person painting contractor cut a $60,000 server quote to $25,000 by sizing the new one to what the business actually needed. Moving the workload to the cloud is the other option, and our cloud migration page covers when that makes sense.

Most plans went up on July 1, 2026, and existing customers see the increase at their next renewal. Business Basic rose from US$6 to US$7 per user per month and Business Standard from US$12.50 to US$14. Business Premium stayed at US$22.

These are Microsoft’s US list prices per user per month from its February 2026 licensing announcement; Canadian-dollar pricing differs and Microsoft notes prices vary by country and currency. For a rough sense of scale, 40 people on Business Standard works out to about US$720 more a year.

If you’re considering Copilot, Microsoft lists Copilot Business at US$21 per user per month on an annual commitment, and the earlier promotional pricing ended June 30, 2026. Our comparison of Microsoft 365 vs Copilot explains what you already get without it. A pilot with a handful of heavy users is a cheaper first step than licensing everyone.

One more thing worth a line: unused licences. Former employees and shared mailboxes that still hold a paid seat add up quietly. A licence review before renewal is one of the easiest savings in the whole budget.

Budget for the baseline first: multi-factor authentication everywhere, endpoint protection, email filtering, patching, tested backups and staff training. Then add what your cyber insurer and your clients ask for. There’s no reliable percentage that fits every business.

The latest Statistics Canada data is a useful reality check. In its October 2026 release, about one in six Canadian businesses (16%) were impacted by cyber security incidents in 2025. Businesses spent an average of $54,772 on prevention, though that average includes large companies and isn’t a target for a 30-person firm. Cyber insurance is now held by 34% of businesses, up from 22% in 2023.

That last number matters for budgeting because insurers set minimum controls. Our article on cybersecurity insurance requirements in Ontario lists what applications typically ask about. The Canadian Centre for Cyber Security’s baseline controls for small and medium organizations is built around getting 80% of the benefit from 20% of the effort, which is a sensible way to rank security spending when money is tight. Our cybersecurity services are built around the same order.

It depends on how much work there is and how broad it is. One hire covers one person’s skills and hours; a managed provider covers a team’s. Compare the full yearly cost of each, including benefits, tools, training and coverage for vacations.

For reference, Job Bank puts the Ontario median for user support technicians at $33.00 an hour, and $35.71 for computer network technicians (2023 to 2024 data). Wages are only the start; you still need tools, security software and someone to cover when that person is away.

We’ve laid out the full comparison in MSP vs in-house IT in Ontario. Many growing businesses land in between, with an internal IT person and an outside team for depth. Managed IT with ACT360 is priced per user per month and quoted in writing after a free assessment, and our agreements include a 90-day exit clause, so the support line in your budget isn’t a multi-year lock-in.

Talk to your accountant before you decide, because the tax treatment is in flux. CRA’s standard rates are 55% a year for computer hardware (Class 50) and 100% for application software (Class 12), and a proposed federal measure would allow a full write-off in the first year.

The CCA rates are on CRA’s capital cost allowance classes page. In September 2026, Finance Canada proposed a Productivity Mega Deduction that would let businesses fully write off most depreciable property acquired on or after September 15, 2026 in the year it becomes available for use. It’s a proposal with draft legislation, not yet law, so confirm the status and how it applies to you before timing a purchase around it.

We’re not tax advisors. What we can do is give your accountant a clean list of what needs replacing and when, so the timing conversation is quick.

Start from an inventory, not last year’s total. List what you run, price the fixed changes first, separate running costs from projects, and review it quarterly. These seven steps work for most Ontario businesses with 10 to 200 staff and take a few hours with the right information.

1. List every device, server, licence and software subscription, with its age and owner.
2. Flag anything on Windows 10, Windows Server 2016 or SQL Server 2017 and price its replacement.
3. Reprice Microsoft 365 at the new rates and remove licences nobody uses.
4. Set the support line from a real quote or a full in-house cost, including benefits and coverage.
5. Check your cyber insurance renewal questions and budget any controls you can’t yet prove.
6. List projects separately, each with a cost, an owner and the business reason for doing it.
7. Hold a contingency and book a quarterly review to compare actual spending with the plan.

For managed IT clients, budgeting is part of the Optimize step of our ACTION approach: quarterly business reviews where we look at what’s aging, what’s changing in Microsoft licensing, and what the business has planned. Clients come out of the fall review with a list of replacements, renewals and projects for the next year, each with a rough cost and a recommended quarter.

If you want that kind of planning without a full managed agreement, our vCIO services cover the strategy side, and our article on what a vCIO actually does explains the role.

The best 2027 IT budget isn’t the smallest one. It’s the one that has no surprises in it: the server deadline already priced, the Microsoft renewal already repriced, the old PCs already scheduled. Get those fixed lines down first and the rest of the conversation becomes about priorities instead of emergencies.

If you’d like help building yours, our free IT Readiness Assessment starts with an inventory of what you run and ends with a prioritized list you can take into budget season. You can also call 705-739-2281 or email [email protected].