Execs think your IT budget is bigger than it really is, report says

It often seems like IT has a harder time justifying a budget increase than the other departments in the company. One reason that might be the case: Finance leaders and other execs are misinformed about how big the IT budget actually is. 

IT and the business side are often woefully out of sync when it comes to information and beliefs regarding IT spending, budgets and value, according to recent research from Forrester and the TBM Council.

The study shows that the two sides need to be in closer communication about how much IT spends, how much it needs and what value technology produces for the company.

On average, the businesses leaders thought their company’s IT budget was 60% larger than it actually was. According to the C-level executives polled, IT spending was 8% of the company’s total revenue. In comparison, a survey of CIO’s showed that the real number was 5%, on average.

Execs: IT holds the business back

In addition, there’s also a big discrepancy between the two sides’ views on how IT is helping the business succeed. In fact, half of the business leaders surveyed said IT is actually holding their organization back.

Meanwhile, two-thirds of CIOs said IT is helping the business achieve success — a number that is still surprisingly low.

That may mean that some of the spending might not be going to the right places. According to Forrester, the bulk of the IT budget (two-thirds) goes toward maintenance and operations, meaning there’s little left to spend on projects that add value.

Aside from spending more money in key areas, IT could also be doing a better job of communicating its value to the rest of the business. Of course, that starts with making sure all decision makers are aware of the actual size of the IT budget.

IT must also think of new ways to measure the value the department creates and report that to other executives. Some of the areas to tout, according to the Forrester report:

  • the help desk’s average time to respond to incidents
  • user satisfaction with IT support
  • ROI of completed projects, including unexpected benefits or results that exceeded expectation, and
  • projects that have enabled the growth of the business.

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