How Company Size Relates to IT Spending


This week we’ve come to the conclusion that company size is one of the major factors of determining how much money the company spends on IT. While I was doing research on how company size correlates to IT spending, I’ve came across interesting findings. Here is a list of key findings that I was intrigued by:

  1. Large companies often times spend less money on IT than small and midsized companies. The average spending of small companies is 6.9% of revenue on IT, midsize companies spend 4.1%, and large companies spend 3.2%.
  2. Midsized companies spend $13,100 per employee on IT, while large companies spend $11,580 per employee.
  3. The majority of the top performers of all company sizes utilize a more conservative approach to IT by avoiding projects that are large and by demanding quick investment payback.

What are your thoughts on these finding? Why do you think smaller companies spend more on IT than bigger companies? Do you believe these findings are accurate and why?


One Response to How Company Size Relates to IT Spending

  • I have no reason to believe that the findings are inaccurate, but there is a bias to the calculation of IT spending as a percentage of revenue; larger companies, by the article’s definition, have larger revenue streams than smaller companies. Thus, if two companies spend the same amount on IT, the larger of the two will spend less as a percentage of revenue than the smaller one.
    I liked that the article recognized that smarter spending—not more spending—is the hallmark of a successful IT operation. Just because an IT investment is costlier, it is not necessarily better for an organization; a costlier IT project can also artificially boost expectations about the value created by the project. When management is expecting miracles from a costly IT investment, even a successful implementation can disappoint. Thus, it is important to choose IT investments wisely (taking note of Hubbard’s recommendations in “Everything Is Measurable”) and be realistic about their effects on the business.

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