May 31 2012   6:44PM GMT

Why IT spend as a percentage of revenue doesn’t work

Christina Torode Christina Torode Profile: Christina Torode


Using IT spend as a percentage of revenue to figure out how to divvy up IT investments doesn’t work in many large companies. For one, most enterprises have varied business units and goals. One business unit might be in fast-growth mode and require more tech spending; another might be mature and held to a lower IT spend; and yet another might be going through a transformation project that requires a different spend. So picking a standard IT spend as a percentage of revenue for all of those units isn’t going to cut it.

And this pigeonhole of a metric certainly doesn’t reflect the ever-evolving and growing importance of IT investments in relation to a company’s ability to grow and compete. The run, grow, transform (RGT) model may be a better approach.

Read my CIO Matters column to see why Richard Hunter, vice president and Gartner fellow, recommends using a RGT model (and other more forward-looking metrics) for allocating IT spend, and learn about the real-life challenges CIOs encounter when using said RGT model.

 Comment on this Post

There was an error processing your information. Please try again later.
Thanks. We'll let you know when a new response is added.
Send me notifications when other members comment.

Forgot Password

No problem! Submit your e-mail address below. We'll send you an e-mail containing your password.

Your password has been sent to:

Share this item with your network: