IT budgets not aligned with revenue
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A study by analyst group Gartner has found that over the past three years, companies’ spending on IT is not in line with revenue growth. Even in organisations that experienced 10% revenue growth, the majority did not demonstrate IT budget growth of more than 5%.
The study involved the analysis of 900 companies over 20 industries and sectors worldwide, to compare IT spending patterns with revenues during the past three years. The research observed that while companies are reluctant to increase their investment in IT while revenue is growing, IT investment is frequently cut when revenues drop.
“This analysis confirms that organisations are not increasing their investment in IT at the same rate as the business is growing,” said Jed Rubin, director of consulting at Gartner.
Gartner reports that companies with frequent budget review cycles were most likely to align IT budgets to revenues. However, another important factor in creating that link was good communication between the IT function and the leaders in the business.
