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Archive for the ‘budget’ Category

TelusAccording to the 2009 Rotman-TELUS Joint Study on Canadian IT Security Practices the financial crisis has had a negative impact on IT security budgets.

The 2009 subprime mortgage crisis was prompted by a striking rise in mortgage foreclosures in the United States, with major adverse effects for banks and financial markets around the globe.

Regarding security budgets being affected by the global crisis, 75% of responding organizations reacted by applying budgetary cuts to their security expenditures, while 25% actually increased their security investment.  50% of the respondents reported minor adjustments where only 10% or less of their budget was affected (most of them adjusting downward). 20% reported moderate cuts of 10%-25%, and less than 10% applied severe cuts of 50% or more.

A detailed analysis of the reactions showed that Average Budgetary Impact was a 4.6% budgetary cut in IT security expenditures in the Government sector, a 6.6% budgetary cut in the Private sector, and a 10.8% budgetary cut in the Public sector (from Table 17).

The 2009 report has IT security metrics on:

  • Application Security
  • IT Security Budgets
  • IT Governance
  • IT Security Breaches
  • Security Technologies

Proceed here for a full copy of the Joint Study on Canadian IT Security Practices .

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GartnerMark McDonald, group vice president and head of research in Gartner Executive Programs, suggests replacing the IT budget / revenue ratio with a metric that has meaning – like IT headcount to Free Cash Flow.  That is a metric one CIO is using and it makes more sense because it can be managed.

He suggests measuring IT headcount because more than 70% of most IT budgets are already contractually committed – effectively removing them for short-term management changes.  IT headcount is the result of factors the CIO can control, like the level of automation, the skill of their people, the structure of their operations and the nature of their IT investment budget.

McDonald suggests that free cash flow is a better numerator, as it is more indicative of a company’s health.  Management can influence free cash slow and manage it to some extent in either a strong or weak economies.  Case in point; look at organizations building cash in the recession.  Free cash flow is also something that IT can influence as IT systems integrate process and information flows which improves end-to-end process and cash performance.

It is harder to measure, free cash flow and IT headcount, but it should produce a clearer signal and inform better management decisions and actions.

See full article: http://blogs.gartner.com/mark_mcdonald/2010/04/06/it-spend-as-a-percent-of-revenue-%E2%80%93-a-dubious-metric-at-best/

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LogoitmWEB, a source for information technology reference, methodology, and technical content focused on IT departmental management, technology support, and project leadership, posted the following information technology (IT) budgeting metrics.

IT Budget % of Total Revenues (Education Industry): 1.9%
IT Budget % of Total Revenues (Finance Industry): 4.9%
IT Budget % of Total Revenues (Government Industry): 9.7%
IT Budget % of Total Revenues (Health Care Industry): 4.8%
IT Budget % of Total Revenues (Manufacturing Industry): 3.3%
IT Budget % of Total Revenues (Retail/Wholesale Industry): 2.4%
IT Budget % of Total Revenues (Services/Consulting Industry): 4.5%
IT Budget % of Total Revenues (Telecommunications Industry): 8.4%
IT Budget % of Total Revenues (Transportation Industry): 3.8%
IT Budget % of Total Revenues (Utilities Industry): 3.0%

Source: List of Sources

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GroupSeven spending benchmarks are used to help university campuses evaluate IT services. By benchmarking against institutions with similar missions, IT leaders can gain insights into how to best optimize these investments.

Benchmark #1 – Budget Profile [shows how IT dollars are allocated across institutional budget classifications]
Benchmark #2 – Budget Support Level [IT dollars are normalized for institutional size]
Benchmark #3 – Budget Impact [ratio of IT budget to total institution budget]
Benchmark #4 – People Supported per IT Staff
Benchmark #5 – Computers Supported per IT Staff
Benchmark #6 – Staffing Profile Per Service Area
Benchmark #7 – Computer Availability

This article shows actual benchmark results in these areas. Compiled by David Smallen and Karen Leach at Hamilton College. Published in Educause Quarterly in November 2002. The article can be found:

http://net.educause.edu/ir/library/pdf/eqm0234.pdf

This report was followed up by a 32 page paper entitled “INFORMATION TECHNOLOGY BENCHMARKS: A PRACTICAL GUIDE FOR COLLEGE AND UNIVERSITY PRESIDENTS” (written by Smallen and Leach) which was published by the Council of Independent Colleges in June 2004. This report contains more data and a more complete explanation of the benchmarks. The paper can be found:

http://www.cic.edu/publications/books_reports/IT_paper.pdf

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A “Information Technology Operation Benchmarks Report” created by Nick Ganesan, CIO/Associate Vice-Chancellor for ITTS aQuality Benchmarkt Fayetteville State University.  The report contains detailed benchmark data for:

  1. IT Budget Profile
  2. IT Budget per IT User
  3. IT Budget as a Percentage of Institutional Budget
  4. IT Users to IT Staff ratio
  5. IT Staff to Number of PCs – Ratio
  6. Staffing Profile by service area
  7. PCs to IT User Ratio
  8. Central IT Support Percentage
  9. Staff ratio by service areas

The benchmark data is against IT services at universities located in the United States.

Location of Report: http://www.kfupm.edu.sa/sict/ictc/related%20documents/IT%20Benchmark/Fayetteville%20State%20University%20IT_Benchmarks_ver1.pdf

Local Copy: IT Benchmark for Universities – Fayetteville State University Report

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