KPI Benchmarks : IT Expense as a Percentage of Total Revenue
- Benchmark Range
- Benchmark Average 3.3%
- Benchmark Sample Size (n) 72
* Is High or Low Best: Lower is Better
KPI Details : IT Expense as a Percentage of Total Revenue
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.
KPI Best Practices : IT Expense as a Percentage of Total Revenue
- IT Support employees support a large number of employees/users
- Re-evaluate IT vendor contracts on a regular basis to seek cost reduction/ avoidance opportunities
- Outsource highly repetitive and non-core IT operations to lower cost centers
KPI Calculation Instructions IT Expense as a Percentage of Total Revenue?
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.
KPI Formula :
(IT Department Expense / Total Revenue) * 100