Definition of IT spend

In this article:

Definition

IT spend, as a measure used by Interactive Benchmarking, is the total annual spend for IT to support an enterprise. IT spend can come from anywhere in the enterprise that incurs IT costs. It is calculated on an annualized "cash flow view," which contains capital spending and operational expenses, but not depreciation or amortization. Organizations that do not track IT spend can instead use their IT budget for the year.

NOTE  IT spend does not include Shadow IT, a technology that falls within the scope of standard IT spend but is outside the control of the IT department. The IT department is not consulted about, nor does it support, this technology.

IT Spend includes from a financial (cost pool) perspective

• Hardware
• Software
• Internal and external labor, including contractors, travel, benefits and training
• Outside services and external IT services like consulting, system integration, software as a service, and infrastructure as a service
• Telecom, including network equipment, data and voice transmission
• Facilities and power costs associated with supporting IT in an enterprise, including the fully burdened costs for the facilities used by the IT staff to support an enterprise:
  • Office space
  • Furniture
  • Electricity
  • Maintenance
  • Property taxes
  • Security
  • Office supplies.
  • Occupancy costs for space dedicated to IT functions, such as data centers and computer rooms, including power/heat management and raised floors

  NOTE Costs include all taxes, except value-added tax where it is recovered or refunded to the organization 

IT Spend includes from a resource tower perspective

• Compute - Windows servers, Linux servers, Unix servers, midrange servers, mainframe servers and high performance computing machines
• Storage - Online storage resources, offline storage resources, mainframe online storage resources and mainframe offline storage resources
• Network - LAN/WAN networks, voice resources, transport
• Platform - Database, middleware, mainframe database, mainframe middleware
• Output - Central print
• End User - Workspace machines, mobile devices, end user software, network printers, conferencing & AV equipment, IT help desk, desk-side support
• Applications - Application development, application support and operations, business software),
• Delivery - IT service management, program, product and project management, client management, operations center
• Security & Compliance - Security, compliance, disaster recovery
• IT Management - IT management and strategic planning, enterprise architecture, IT finance, IT vendor management
• Dedicated data processing equipment used in operations, production and engineering environments — examples are computer-aided design/computer-aided manufacturing (CAD/ CAM) and standard computing equipment used in devices for factory automation, and tablet PCs used by healthcare professionals.

IT Spend does not include

• Costs for technology or services that are resold, such as salaries for developers involved in building commercially packaged software or IT-skilled employees who provide services for the organization's external clients.
• Operational technology:
  • Equipment built or purchased for non-data-processing purposes, but which has computerized components, such as robotic manufacturing machines, specialized stock trading end-user devices (trader headsets, automated teller machines, specialized point-of-sale devices, scanners, and blood pressure monitors and sensors on a supervisory control and data acquisition (SCADA) system).
  • Appliance-like or proprietary data processing equipment that has a single (typically industry-vertical) purpose that cannot be used for other general purposes, such as a computer that can only control the flow of electricity through the power grid. Since it cannot be repurposed, it is not included in our model. Note that other systems that gather data from this type of computer that can be used for other purposes are not considered operational technology, and therefore, are within the scope of our model.
• Depreciation or amortization expenses, which could lead to double counting from an accounting perspective.
• Internal "cross charges" and corporate allocations related to large, significant, or unusual one-time expenses, such as reductions in workforce, redundancy, re-locations, retirement, human resources, and chairperson salary.
• Business data subscriptions and services (such as Bloomberg), even if they are managed by the IT organization.
• Business process outsourcing services (BPO) where organizations outsource entire business functions, such as payroll or benefits management. This includes cases where the BPO vendor provides access to software, and also guarantees that the outcomes of their services will meet business requirements, such as tax and withholding regulations. Vendor-provided software as a service (SaaS), which only guarantees that the software will perform as specified, is within scope of IT spend. Traditional outsourcing of IT functions, such as servers and email, are also within scope.
• Shadow IT, which is standard IT spend that is outside the control and support of the IT department.

For more information about how IT spend is used in Interactive Benchmarking metrics, see Industry benchmark metrics.

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