As a percentage of Revenue, what would a reasonable cost of IT systems etc be?

Question

I know this will depend, of course, but what I am looking for is rule of thumb type figure. IT should drive companies profits and performance when working well. When it isnt working well it inhibits performance. Hence what i am looking for is people's experience of what a quality IT system costs, and clearly this is related to size of company. Hence, i have asked if you can provide this figure as a percentage of revenue.

Answer 1

if your company does all it business on the net, or is a web based service then it could be very high, upto 20%

eg. A graphic design or architect company, high powered IT, programmes and printers costing £1000s, turnover of £50-100K per working individual, where each person needs their own set up and communal printer, or big shared network, separate power and fire safe data back up.

If the IT has nothing to with your business, say manufacturing and is only used as for records, payroll, supply and admin, then it needs to be as low as functionally possible. <1 % or less. A few stand alone PCs, with data backup locally.

Ignore the ISO assessor, if you need a really good IT set up, then you could easily see 5-10% of your revenue go on IT, every year. Especially if most of your work was done on their without very little need for additional tools. (design work etc..)
Technology moves so quick and if your are working at a leading edge then you have to keep pace.

'Revenue Radar' is that you David, David Brent ?? 'IT anonymous'?

Answer 2

An IT system should under no circumstances rule your company. There is a cost of ownership but no way should the tail wag the dog. IT should be anonymous at best and should not be seen on the revenue radar.

Answer 3

depends entirely on the nature of the business....

A web hosting company is going to spend more on IT systems than an Ice Cream man is.

Answer 4

i think it would depend entirely on the nature of the business, and how crucial IT is to the business.