* Is High or Low Best: Lower is Better
IT Expense as a Percentage of Total Revenue measures the IT investment that is utilized by the company to generate its stated revenue. A relatively high value for this KPI can indicate that the company has not utilized practical IT outsourcing strategies, costs may be related to poor user support quality (leading to rework), redundant or low-value work, overstaffing and/or general inefficiencies within the IT function, etc. While a low value is typically best for this KPI, some companies or industries (e.g., Financial Services, Broadcast Media, etc.) strategically invest a large amount of money in IT to support their normal operations and maximize customer experience.
Total expense incurred by the IT Department divided by the total revenue earned by the company over the same time period, as a percentage.
Two values are used to calculate this KPI: (1) the total expense incurred by the IT Department, and (2) the total company-wide operational revenue generated during the same measurement period. IT expenses include labor, applications, security, hardware, software, network infrastructure, data center expenses, facilities costs, end user devices, etc. Only include operating expenses in the numerator of this calculation, but do not include depreciation in the numerator. Only include noninterest income in the denominator of this calculation.
(IT Department Expense / Total Revenue) * 100
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