The Uses, Misuses, And Abuses Of Tech Spending And Budget Benchmarks
For most tech execs, benchmarking has simply become part of the job, whether by personal choice or business directive. They’re regularly asked to compare IT’s costs, quality of service, and efficiency to those of competing organizations. To be clear, benchmarking can be a valuable exercise. It can be used to pace digital or other transformation efforts, provide a business case for why tech spending must increase, or give a fuller picture of IT’s support base.
But benchmarks should be neither the be-all nor the end-all of an organization’s IT planning. To state the obvious, every organization is different — what works for one organization might not work for other organizations, even in the same industry or geography. Forrester’s tech insight and econometric research (TIER) shows that there are two common stumbling blocks with benchmarks that tech execs should consider when beginning any comparative measurement exercise:
- Source data is limited in both availability and reliability. Benchmarking data is only available when organizations provide it, with some being reticent to share proprietary details even in anonymized form. Other limiting factors, including industry, size, and geography, further complicate the situation. And even the seemingly useful data from relevant organizations may be provided by employees who lack a complete picture — for example, take tech spend, which is almost always spread across several departments and business units.
- Categorization of data differs substantially. What one organization recognizes as a core line item in its IT department’s budget may be a standard business cost in another company. Varied organizational structures and operating models also generate very different financial accounts or resource pools, making drawing detailed conclusions even more difficult.
The challenges don’t end there, so please read Forrester’s newly published report, The Uses, Misuses, And Abuses Of Tech Budget And Spending Benchmarks, which provides important insights into the easy-to-miss issues that trip up benchmarking exercises — as well as critical best practices and alternatives that you can consider when your CEO or CFO comes calling.
Once you have read the report and are ready to go, make sure that you access Forrester Decisions’ high-quality benchmark data provided through our partnership with ISG and log an inquiry to find out more.
Through its partnership with Information Services Group, a leading technology advisory and IT benchmarking firm, Forrester will provide unique IT benchmarking data and insights to its clients from ISG Inform™. This data is carefully sourced from 6,000-plus assessments across a broad range of regions and industries. Learn more about ISG Inform™ here: https://isg-one.com/consulting/isg-inform