IT Budget Benchmarks and More IT Staffing Benchmarks

Apparently everyone loves IT staffing benchmarks and IT metrics so much that I am following up IT Staffing Ratios Benchmarks with some additional IT staffing benchmarks and some interesting IT budget benchmarks.

IT Performance Benchmarks

It is difficult to imagine that from all the possible IT performance benchmarks there would be one IT benchmark that stands out. One single benchmark that might synthesize the core question of the cost of IT versus the value of IT.

One possibility might be an interesting IT staffing benchmark I came across from a 2008 Robert Half Technology survey of 1400 CIO’s to determine the ideal ratio of IT staff to employees. The survey resulted in three IT staffing benchmarks based on company business model for the number of employees to IT staff FTE:

  • Compete at the cutting edge of innovation (25:1 to 50:1)
  • Compete on full service and overall value (60:1 t0 100:1)
  • Compete on thin cost margin and scalability (125:1 to 200:1)

Although this benchmark is from 2008, it is still a useful data point for CIO’s to consider.

For CIO’s in higher education, the 2011 EDUCAUSE Core Data Service places the IT staffing benchmark for all institutions at 5% or 20:1. You may also have an additional challenge in making an honest decision on what it means to be cutting edge and innovative compared to all other industries.

IT Staffing Benchmarks

In yesterday’s post, IT Staffing Ratios Benchmarks, I shared the staffing benchmarks for the breakdown of the IT staffing ratios. These are important benchmarks to keep in mind as you consider overall IT performance.  But they are perhaps the least meaningful of the IT staffing benchmarks. For those in higher education, that includes many of the Core Data Service benchmarks.

When considering IT staffing levels within the context of overall IT performance, it is more important to link IT staffing levels to the demand that drives their workload. In this way you will be analyzing the fixed and variable drivers of IT demand and linking these demand drivers directly to your IT staffing levels.

This should be an extension of your portfolio management model which should be supporting your demand management goals for the percentage of resource capacity allocated to General Administrative Duties, Operations Support (Break-fix), Maintenance, and Projects.

Here is just a sampling of some additional cross-industry IT staffing benchmarks for specific workloads.

IT Staffing Benchmark to Workload Ratios Benchmark
Admin to Raw SAN Storage (TB) 1:250TB
Admin to Usable SAN Storage (TB) 1:140TB
Admin to Server Support (Physical) 1:50-75
Admin to Server Support (Virtual) 1:185-450+
Help Desk Support Level 1 per PC 1:383
Help Desk Support Level 2 per PC 1:500
PC Support Imaging to PC 1:2333
PC Support Imaging to User 1:3000
Help Desk Support Level 1 to User 1:382
Help Desk Support Level 2 to User 1:638

Of course your staffing levels will vary but you should accept the notion that as you increase your IT process maturity, use of automation and virtualization there should be a corresponding increase in your IT staffing ratios to reflect your new efficiencies. Even if these workload based measures don’t change there should certainly be a shift of resource capacity away from Operations and Maintenance.

IT Budget Benchmarks

By now everyone should be tracking IT budget for what percentage of the IT operating expenses are for Operations and Maintenance (O&M). This metric has been in use for many years and serves as a benchmark indicator of IT maturity and efficiency.

In previous decades when legacy mainframe and midrange systems were common and the ratios of IT staff to systems were low (1 admin to 20-30 UNIX systems, 1 admin to 50-75 Windows servers), the O&M benchmark was 80%. Today, with the efficiency of virtualization, remote administration, and more powerful tools the benchmark is 65% to 70%.

Other standard cross-industry IT budget benchmarks include:

Key Performance Indicator Benchmark
IT Spend as a Percent of Revenue 4.5%
IT Spend per Employee $10,428
IT Spend – % Capital 25%
IT Spend – % Operating 75%
IT Spend – % O&M 70%
IT Strategic Spend – Run 67%
IT Strategic Spend – Grow 19%
IT Strategic Spend – Transform 14%

Many of you may have moved beyond simply tracking percent O&M. For you, you may be classifying each IT operating expense using some version of Gartner’s classifications of Run, Grow, and Transform which translates as:

  • Run = running the business
  • Grow = creating new efficiencies or capabilities
  • Transform = creating strategic business value

The benefit of Run, Grow, and Transform (benchmarks provided above) is it simplifies the analysis of the cost of IT versus the value of IT by demonstrating how much of the IT spend is consumed by just maintaining the current portfolio versus how much of the cost of IT is an investment in increased business performance and growth.  By the way, this same model can be applied to the IT staffing allocation.

It should be noted that some businesses and organizations will deliberately have a higher percentage of the budget going to Run. This is often the case when the business model is not changing or when the organization is not planning for growth. This translates into IT functioning more like a cost center and should serve as a warning to CIO’s as to the true IT value proposition as seen by the organization.

EDUCAUSE Core Data Service

As I noted above, perhaps the EDUCAUSE Core Data Service will evolve to use some of these more meaningful metrics in order to better serve the industry specific needs for IT staffing benchmarks and IT budget benchmarks.

So instead of simply asking how many are using virtualization, ask them for the virtualization penetration rate and ratios of admin to virtual machines. That way, CIO’s wouldn’t have to rely solely on cross-industry benchmarks to gauge efficiencies and performance.

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5 Responses to IT Budget Benchmarks and More IT Staffing Benchmarks

  1. Pingback: IT Budget Benchmarks and More IT Staffing Benchmarks | IT and Leadership |

  2. Mohammad Aboali says:

    What is the source of this info, this really interesting.

  3. The Higher Ed CIO says:

    I do cite some source in the post and other are referenced indirectly.

  4. Mavis Moon says:

    What composes the “IT Spend” amount. For example, do you count all software licensing costs in there? Do you count the cost of VOIP lines? Do you count the salaries of all the IT personnel?

    What is considered an “IT Spend”?

  5. The Higher Ed CIO says:

    the IT Spend is ALL IT spending – hardware, software, personnel, contractors etc… ALL spending.

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