Infrastructure cost spiral for small to mid-level organisations

Jul 29, 2005: Small and mid-sized organisations (under US$1 billion in revenue) around the world are spending 53 percent to 60 percent of their total information technology (IT) budget on infrastructure, including data centre, voice and data networks, desktop and help desk, according to Gartner Consulting's Worldwide IT Benchmark Service. For organisations over US$1 billion in revenue, the average spent on IT infrastructure is just under 50 percent.

"For many small and medium sized businesses, particularly those that compete in highly competitive marketplaces, IT can be a key component of competitive strategy," said Howard Rubin, an associate with Gartner Consulting. "However, in more mature markets, some small organisations still treat IT as just another cost of doing business. Those organizations continue to focus on keeping IT costs down."

For companies with less than US$1 billion in revenue, media companies and IT firms were among the leaders in terms of IT spending as a percentage of revenue in the 2005 rankings, at 8.16 percent and 6.85 percent, respectively. Banking and financial services organisations typically spend at the highest rates, but they ranked sixth and fourth, respectively, in the 2005 results. Energy and consumer products organisations under US$1 billion in revenue are among the lowest spenders on average.

Gartner's Worldwide IT Benchmark Service surveys companies from more than 30 countries in over 20 industry sectors.

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