In a study on company size and IT spending, ROI consultancy Alinean Inc. compared the IT spending and performance ratios of publicly traded U.S. companies. The study divided companies into large (those with revenue of greater than $2 billion), medium sized (those with revenue of between $50 million and $2 billion) and small (those with revenue of less than $50 million). Here are some of the findings:
- Small and medium-sized companies often outspend larger ones. The average small company spends 6.9% of revenue on IT. Midsized companies spend 4.1%. Larger companies spent a miserly 3.2% of revenue.
- Midsized companies spend $13,100 per employee on IT. Large companies spend $11,580 per employee.
- Companies that invest the most in IT aren't always the best performers. On average, the most successful small and medium-sized companies were more frugal than the average company when it came to spending as a percentage of revenue.
- The most successful companies, it turns out, are more effective with their investments. Most top performers are conservative in their approach to IT, avoiding large projects and demanding quick investment payback.
This was first published in September 2005