Editor's Note: Welcome to SmartAdvice, a weekly column by The Advisory Council (TAC), an advisory service firm. The feature answers two questions of core interest to you, ranging from leadership advice to enterprise strategies to how to deal with vendors. Submit questions directly to firstname.lastname@example.org
Question A: How should we determine the appropriate level of IT spending as a percentage of overall company revenue?
Our advice: This was a good question back when all IT did was batch-process transactions for the accounting department and print out some reports; there was only so much worth spending on that kind of overhead. But those simple times are long gone. Since then:
So executives can still find out if the organization is spending too much, too little, or just about right, regardless of the IT spending as percentage of revenue. Even a big percentage, if it's well targeted, well managed, and line executives are willing to fund it, is likely to be appropriate. And no matter how small the percentage, if it's poorly targeted and poorly managed, it's too much for what you get.