October 29, 2018 Stewart Marshall

HOW MUCH SHOULD YOU BE SPENDING ON IT?

The rule of thumb used to be perhaps 5 or 6% for smaller businesses turning over up to $3,000,000, and 4 to 5% for mediums with a turnover of up to $25,000,000, or 250 staff.

Rather unfairly, the bigger and richer an organisation gets, the less it needs to spend as a percentage.

However, times have changed and technology is cheaper than it used to be. The laptop I bought in 1999 cost $4,500 or so in today’s money, while its contemporary would only set you back about $1500.

But, this is tempered by the fact that we’re using far more technology. The democratisation of IT, particularly through the profusion of cloud solutions and package offerings, means that tools that existed only for the domain of big business are now available to just about everyone.

Not surprisingly then, investment in IT assets across the board is increasing because they improve efficiency, increase customer engagement and help deliver greater revenues.

So, today’s rule of thumb is that medium business should be spending in the region of 6% of revenues, and smaller companies perhaps as much as 7% or even 8%.

Less and you risk being uncompetitive. More and you could be wasting a lot of money.

Let me know how much you’re spending


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