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THE IT ORGANIZATION
Estimating and benchmarking IT spending provide focus and validation of an organization’s
IT spending and investment strategy. It also educates IT management and the IT steering
committee on the spending levels and strategies of peer companies. Additionally,
it provides deeper insight into company – specific IT spending and puts into clear focus the
actual total money spent on IT.
Benchmarking
Measurement against groups of companies or other methodologies, as well as
incorporating idiosyncratic company information, will help arrive at more accurate answer.
While there is no consensus on a single correct way to estimate the appropriate level of
IT spending.
Different technique of benchmarking
- Comparison of IT spending as a percent of revenue against peer group of companies
- Comparison of IT budget by company size (revenues)
- Comparison of IT spending per employee against peer group of companies (industry or other comparative).
- Formula developed by leading IT investment researcher Paul Strassman based on key drivers of IT spending.
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