KPIInformation Technology

IT Cost as % of Revenue

Total IT expenditure as a percentage of total revenue

What is IT Cost as % of Revenue?

IT cost as a percentage of revenue is the share of revenue an organisation spends on information technology. It shows how much of income goes into technology.

It is used to compare IT spending over time and against similar organisations, though the right level depends on how much the business relies on technology.

How this KPI is measured

Function
Information Technology
Sub-function
IT Cost Management
Industry
All Industries
Type
Lagging
Impact
Financial control
Unit
%
Measurement frequency
Quarterly / Annual
Formula
(Total IT spend / Total revenue) × 100

How to calculate it

Divide total IT spend by total revenue, and multiply by 100.

For example, if IT spend was 3,000,000 and revenue was 100,000,000, the share is 3%.

Define IT spend consistently, including people, hardware, software, cloud and services, and compare with similar businesses and with your own history.

Where it is used

  • Benchmarking

    Compare with peers.

  • Planning IT budgets

    Set spend relative to growth.

  • Discussing investment

    Frame technology costs.

How to improve it

Tips and common mistakes

  • Lower is not always better. Technology can drive growth.
  • Technology-intensive businesses spend more.
  • Look at the split between running and changing the business.

More Information Technology kpi library

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