Industry Benchmarking

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This section describes the purpose of Industry benchmark metrics. The Apptio Benchmarking product is a self-service SaaS application that you can use to do peer benchmark cost comparisons. The Benchmarking addresses the what , but not the why , how or what’s next . You can use your organization’s costs, compare them with the benchmark metrics and research/rationalize your actuals to determine the why and how. You can then use this understanding to create actionable next steps, outcomes, and deliver value. You can even work with third party consultants to help interpret the comparisons and provide advice/recommendations.

Industry Benchmark metrics

Industry metrics enables you to compare overall IT Spend to Industry peers.

Type Description
Target audience

IT Leadership

Purpose

Use high-level industry metrics to analyze IT spend to help make strategic decisions informed by these metrics, but not solely by benchmark comparison. IT investment levels vary year to year and benchmark provides a reference point. It’s more important to understand the drivers of actual costs in comparison to the benchmark metric than it is evaluate it as good or bad (based on being above or below the benchmark).

Usage

Semi-annual reviews

Guidance

These metrics should be used together since any one metric does not tell the complete story. Understanding and analyzing the relationships between these metrics and other key business measures helps drive decisions.

For example, the metric IT Spend per Employee can be impacted by the following:

  • The organization’s labor sourcing strategies (insourced Vs outsourced)
  • Revenue per employee
  • Size of workforce

The organization’s IT Spend per Employee may be higher than the benchmarks due some of the above (justifiable) drivers. A decision on lowering this metric needs to be made within this context.

Table 1: Industry Benchmark Intent

There are five high-level metrics on organization financials that help you compare yourself with peers.

Metric

How to interpret – outcomes and questions to consider

IT Spend as % of Org Revenue

  • Are we investing enough / too much in the IT budget relative to business performance?
  • Are we investing in IT to drive revenue growth and create new capabilities for the business?
  • Are investments in IT being made ahead of expected growth?

IT Spend as % of Org OpEx

  • Are investments in IT driving automation to reduce operating expense?
  • Is IT a strategic differentiator for the business?
  • Does our organization have large operating margins?

IT Operational Costs % of Spend

  • What is our IT investment level?
  • Are we investing a healthy amount into change and transform the business activities in IT as compared to run the business and onetime project activities?
  • Are IT investments supporting business outcomes and capabilities?

Percent of FTEs in IT

  • Do we have an appropriate level of IT staff?
  • Do we provide an appropriate level of IT support?
  • What is our IT labor sourcing strategy? (insourced, outsourced)

IT Spend per Employee

  • Are we providing the right level of support per employee?
  • Are we driving automation in the revenue generating workforce?
  • Do we have a similar number of employees as compared to like sized companies? (revenue per employee)
  • What is our labor staffing model?

Table 2: Industry Metrics Outcomes

Apptio uses Rubin Worldwide ( Learn more ), a leading provider of technology economics research and IT benchmarks data to drive these benchmarks.

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