It Budget Revenue Ratio

In a recent study deloitte insights found that companies spend on average 3 28 of their revenue on it.

It budget revenue ratio. It spending as a percent of revenue and dozens of other it budget ratios are provided by industry and company size. Looking forward nearly half 46 of it leaders expect their budgets to increase in the next 12 months but those at large organisations 250m turnover are less optimistic about future budget. Midsized companies spend 4 1. An it budget to revenue ratio is a critical starting point in the budgeting process.

Large companies spend 11 580 per employee. 2019 and 2020 are all about digital transformation as in years past global it spending is expected to continue to grow in 2019 increasing 3 2 percent to over 3 8 trillion as enterprise software cloud and digital transformation projects boost growth. Overall as of 2013 businesses seem to spend between 4 6 of their revenue on it and this range is recommended by cio magazine. Ceos expect it to rationalize its spending against broad industry averages.

There is significant variation by industry with banking and financial services at the top end of the scale at 7 9 and. Midsized companies spend 13 100 per employee on it. By fully integrating it into products services and value propositions instead of just a backend system companies will quickly gain the. Overall it is 5 10 of total budget that includes both opex and capex but it very much depends on industry and in your case it could be driven by compliance requirements as well.

For 2013 it found that the average it spending as a percentage of revenue is 5 2. Banking and securities firms spend the most 7 16 and the construction industry spends the least 1 51. Larger companies spent a miserly 3 2 of revenue. This was a slight increase from the 2012 average which was 4 7.

As shown in figure 1 it spending as a percentage of revenue in the financial services industry ranges between 4 4 at the 25th percentile to 11 4 at the 75th percentile. It spending as a percentage of revenue median in it expenditure as a percentage of business entity revenue by industry 2015 overall it spending as a percent of business entity revenue is 2 3 at the median. In considering it spending as a percentage of revenue the first important principle is that this metric varies greatly by industry. The old standby.

Although many it managers are quick to point out its limitations it helps an organization understand its current it spending context.