You may be noticing a theme here, and everywhere you look today – recession and its impacts on world-wide cost cutting initiatives. Â IMF members are no more immune to cost cutting than anyone else. Â For many companies, the first question when considering cost-cutting initiatives is, “Where do we stand now, and how much should we plan to cut? Â Often, the decision is made at the senior executive level, and IT is asked to carry their portion of the load like every other organization in the company. Â Some goals may be possible, and others may be too much of Â a reach.
Leveraging comparative data can go a long way within an organization. Â IMF has received many requests in recent months to provide a snapshot of IT spending compared to company revenue, or IT spending compared to total employees. Â These highest-level metrics can help the organization frame follow-up activities, provide feedback to senior executives creating cost reduction targets, and ascertain the feasibility of the eventual target for savings. Â Absent of more detailed information (or the time to complete a more detailed analysis), high level metrics can go a long way towards determining the eventual success of the cost cutting initiatives.
While specific technology product metrics are generally driven by volume (e.g. cost per server, cost per desktop, and the like), high level metrics are generally driven by industry. Â Technology focused companies spend more on technology than others and banks require significant systems because of their regulatory environment, while manufacturing and consumer goods companies invest less in technology for company management and more on product development and distribution. Â Companies should seek metrics that are focused on their industry when benchmarking at a high level.
IMF members have access to a full report of high-level spending metrics by industry. Â If you can’t get access to the report, here are the highlights:
- IT Spending can range from less than 2% of company revenue to nearly 15%
- IT Spending can range from $2,000 to $11,000 per company employee
- Each industry shows a unique spending pattern with a great deal of overlap in ranges
For more information on IT spending, investment optimization, and more, visit www.theIMF.com and search the online database of 1000+ practitioner-driven reports.