[OT] IT budget survey

My experience is that IT spending increases as a percent of sales as
companies grow larger (seems illogical, but true.) I noticed this
with a client in my consulting days that grew from $10 million
revenue to $180 million over an 8 year span. They started at about
1/2% and grew to about 2%. I surveyed companies and got the same
result. Fortune 500 manufacturers spend 6 to 7%. It appears that
economies of scale are overwhelmed by the increased need to
communicate with more people (probably grows exponentially.) Also
security and segregation of duties both become increasingly important
and costly.

--- In vantage@yahoogroups.com, "Dan Snyder" <dan.snyder@...> wrote:
>
> Bruce,
>
> Our IT budget is currently identical to Todd's (meaning no "plan",
just a
> bunch of approved projects). Over the past 3 years, we've probably
been in
> the 2-3% of sales range (including salaries and everything remotely
IT
> related). During that time, we've been modernizing and we replaced
> literally 95% of our computer hardware and software (including our
purchase
> of Vantage to replace a legacy system). We have improved processes
and
> productivity tremendously, so we have seen a good return on that
investment.
> After we go live with Vantage, I intend to establish a budget at
around 1.5%
> of sales so we can manage change and initiate business improvements
rather
> simply reacting to problems and stuff that broke.
>
> Hope that helps,
> Dan Snyder
> IT Manager
> Mercury Electronics
> 717-428-0222 ext.224
>
>
>
> _____
>
> From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On
Behalf Of
> Todd Caughey
> Sent: Wednesday, March 28, 2007 9:41 AM
> To: vantage@yahoogroups.com
> Subject: RE: [Vantage] [OT] IT budget survey
>
>
>
> Budget? What budget? This is really funny to me because I came here
from a
> small division of a very large multinational public corporation
> (BHP-Billiton when it was just BHP) and budgets were very strict and
> monitored each month. Now in a small private company if the
departments
> budget at all it is for the whole year and there is no review of
budget vs.
> actual. Instead of budget I have a wish list for capital equipment
and
> technology projects for the coming year with no guarantee any of it
will be
> approved until the President tells me, "we had a good month, so do
#3 on
> your list". Of course there are fixed operational costs such as
comm.
> services, maintenance renewals and most important MY SALARY and
some of the
> "technology initiatives are aimed at controlling these costs - or
in the
> case of salary saving me administrative time so we can dodge hiring
an IT
> Assistant. Some projects are actually intended to reduce other
costs (most
> often labor) elsewhere or (GASP!) provide some strategic advantages
to the
> company to increase sales.
>
> Then there are "bolts from the blue"....such as acquiring another
location
> or finding out the 15yo phone system can no longer be
maintained...if it
> dies then it's find new system in a hurry....a $100K addition to IT
> spending. These can make "actual" exceed "planned" and seem to
happen
> regularly enough they should be planned for...call it Project X.
>
> Factoring all of the above (recurring expenses and new projects) I
would
> guess we typically run an actual 1% of gross sales IF sales are
above a
> fixed level that provides decent gross margins. If sales dropped
and company
> fixed overhead costs got to be too big a % of sales IT actual
spending could
> easily drop to .5% of the reduced sales figure.
>
> Years ago I read that industry leading manufacturers spend 3% of
sales on
> IT. I'm not sure what planet they were referring to.
>
> -Todd C.
>
>
> -----Original Message-----
> From: vantage@yahoogroups <mailto:vantage%40yahoogroups.com> .com
> [mailto:vantage@yahoogroups <mailto:vantage%40yahoogroups.com> .com]
On
> Behalf Of Bruce Butler
> Sent: Wednesday, March 28, 2007 8:09 AM
> To: vantage@yahoogroups <mailto:vantage%40yahoogroups.com> .com
> Subject: [Vantage] [OT] IT budget survey
>
> After seeing Todd's posting about spending 15K on a SAN solution, I
> began wondering what, as a percentage of sales, other companies
spend.
> We typically have been planning an IT budget at around 1% of Gross
> Sales. Last year's plan was .8% of Gross Sales. We ended up
spending,
> due to a 3 month slowdown in the business, .4%.
>
> We define IT budget as all computer & software investments made
> throughout the year. That includes things like software maintenance
for
> CAD/CAM, and such outside of "normal" IT purchases.
>
> So as a survey, I figured it would be safe for this group to give a
> spending value as a percent vs. sharing annual sales info. Could you
> please respond simply as;
>
> Planned .8%
>
> Spent .4%
>
> Any relevant notes.
>
> I will try to tally and post results.
>
> Thank you,
>
> Bruce Butler, IT Manager
>
> Knappe & Koester, Inc. < http://www.knappe- <http://www.knappe-
> <http://www.knappe-koester.com> koester.com> koester.com>
>
> 18 Bradco Street
>
> Keene, NH
>
> p. 603-355-1166
>
> f. 603-355-2266
>
> bbutler@knappe- <mailto:bbutler%40knappe-koester.com> koester.com
>
> The information in this message is proprietary and/or confidential
and
> is intended only for the use of the individual(s) named above. This
> message should not be forwarded without permission from the author.
If
> this message is received in error or otherwise by someone other
than the
> addressee, please contact the author at the above number and return
the
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(ITAR) and
> Export Administration Regulations (EAR). The recipient agrees to
abide
> by these laws and their regulations not only for export and re-
export,
> but for disclosure to non-U.S. citizens.
>
>
>
> .
>
> <http://geo.yahoo.com/serv?
s=97359714/grpId=20369/grpspId=1705007183/msgId=5
> 5804/stime=1175089287/nc1=3848547/nc2=3848640/nc3=3>
>
>
>
> [Non-text portions of this message have been removed]
>
After seeing Todd's posting about spending 15K on a SAN solution, I
began wondering what, as a percentage of sales, other companies spend.
We typically have been planning an IT budget at around 1% of Gross
Sales. Last year's plan was .8% of Gross Sales. We ended up spending,
due to a 3 month slowdown in the business, .4%.



We define IT budget as all computer & software investments made
throughout the year. That includes things like software maintenance for
CAD/CAM, and such outside of "normal" IT purchases.



So as a survey, I figured it would be safe for this group to give a
spending value as a percent vs. sharing annual sales info. Could you
please respond simply as;



Planned .8%

Spent .4%

Any relevant notes.



I will try to tally and post results.


Thank you,





Bruce Butler, IT Manager

Knappe & Koester, Inc. <http://www.knappe-koester.com>

18 Bradco Street

Keene, NH

p. 603-355-1166

f. 603-355-2266

bbutler@...



The information in this message is proprietary and/or confidential and
is intended only for the use of the individual(s) named above. This
message should not be forwarded without permission from the author. If
this message is received in error or otherwise by someone other than the
addressee, please contact the author at the above number and return the
message or destroy it. In addition, the recipient of this data agrees to
abide by the United States Export Control of Technical Data and
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Export Administration Regulations (EAR). The recipient agrees to abide
by these laws and their regulations not only for export and re-export,
but for disclosure to non-U.S. citizens.







[Non-text portions of this message have been removed]
Budget? What budget? This is really funny to me because I came here from a small division of a very large multinational public corporation (BHP-Billiton when it was just BHP) and budgets were very strict and monitored each month. Now in a small private company if the departments budget at all it is for the whole year and there is no review of budget vs. actual. Instead of budget I have a wish list for capital equipment and technology projects for the coming year with no guarantee any of it will be approved until the President tells me, "we had a good month, so do #3 on your list". Of course there are fixed operational costs such as comm. services, maintenance renewals and most important MY SALARY and some of the "technology initiatives are aimed at controlling these costs - or in the case of salary saving me administrative time so we can dodge hiring an IT Assistant. Some projects are actually intended to reduce other costs (most often labor) elsewhere or (GASP!) provide some strategic advantages to the company to increase sales.

Then there are "bolts from the blue"....such as acquiring another location or finding out the 15yo phone system can no longer be maintained...if it dies then it's find new system in a hurry....a $100K addition to IT spending. These can make "actual" exceed "planned" and seem to happen regularly enough they should be planned for...call it Project X.

Factoring all of the above (recurring expenses and new projects) I would guess we typically run an actual 1% of gross sales IF sales are above a fixed level that provides decent gross margins. If sales dropped and company fixed overhead costs got to be too big a % of sales IT actual spending could easily drop to .5% of the reduced sales figure.

Years ago I read that industry leading manufacturers spend 3% of sales on IT. I'm not sure what planet they were referring to.

-Todd C.


-----Original Message-----
From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com]On Behalf Of Bruce Butler
Sent: Wednesday, March 28, 2007 8:09 AM
To: vantage@yahoogroups.com
Subject: [Vantage] [OT] IT budget survey



After seeing Todd's posting about spending 15K on a SAN solution, I
began wondering what, as a percentage of sales, other companies spend.
We typically have been planning an IT budget at around 1% of Gross
Sales. Last year's plan was .8% of Gross Sales. We ended up spending,
due to a 3 month slowdown in the business, .4%.

We define IT budget as all computer & software investments made
throughout the year. That includes things like software maintenance for
CAD/CAM, and such outside of "normal" IT purchases.

So as a survey, I figured it would be safe for this group to give a
spending value as a percent vs. sharing annual sales info. Could you
please respond simply as;

Planned .8%

Spent .4%

Any relevant notes.

I will try to tally and post results.

Thank you,

Bruce Butler, IT Manager

Knappe & Koester, Inc. < http://www.knappe- <http://www.knappe-koester.com> koester.com>

18 Bradco Street

Keene, NH

p. 603-355-1166

f. 603-355-2266

bbutler@knappe- <mailto:bbutler%40knappe-koester.com> koester.com

The information in this message is proprietary and/or confidential and
is intended only for the use of the individual(s) named above. This
message should not be forwarded without permission from the author. If
this message is received in error or otherwise by someone other than the
addressee, please contact the author at the above number and return the
message or destroy it. In addition, the recipient of this data agrees to
abide by the United States Export Control of Technical Data and
Equipment under the International Traffic in Arms Regulations (ITAR) and
Export Administration Regulations (EAR). The recipient agrees to abide
by these laws and their regulations not only for export and re-export,
but for disclosure to non-U.S. citizens.

[Non-text portions of this message have been removed]







[Non-text portions of this message have been removed]
Thanks Todd. That is exactly what I was looking for. IT budgeting is
fairly vague for us small guys. I failed to mention that I was not
including salary. Including salary we planned to spend 1.2%, and spent
.8%.



Bruce Butler

IT Manager

Knappe & Koester, Inc.

_____

From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf
Of Todd Caughey
Sent: Wednesday, March 28, 2007 9:41 AM
To: vantage@yahoogroups.com
Subject: RE: [Vantage] [OT] IT budget survey



Budget? What budget? This is really funny to me because I came here from
a small division of a very large multinational public corporation
(BHP-Billiton when it was just BHP) and budgets were very strict and
monitored each month. Now in a small private company if the departments
budget at all it is for the whole year and there is no review of budget
vs. actual. Instead of budget I have a wish list for capital equipment
and technology projects for the coming year with no guarantee any of it
will be approved until the President tells me, "we had a good month, so
do #3 on your list". Of course there are fixed operational costs such as
comm. services, maintenance renewals and most important MY SALARY and
some of the "technology initiatives are aimed at controlling these costs
- or in the case of salary saving me administrative time so we can dodge
hiring an IT Assistant. Some projects are actually intended to reduce
other costs (most often labor) elsewhere or (GASP!) provide some
strategic advantages to the company to increase sales.

Then there are "bolts from the blue"....such as acquiring another
location or finding out the 15yo phone system can no longer be
maintained...if it dies then it's find new system in a hurry....a $100K
addition to IT spending. These can make "actual" exceed "planned" and
seem to happen regularly enough they should be planned for...call it
Project X.

Factoring all of the above (recurring expenses and new projects) I would
guess we typically run an actual 1% of gross sales IF sales are above a
fixed level that provides decent gross margins. If sales dropped and
company fixed overhead costs got to be too big a % of sales IT actual
spending could easily drop to .5% of the reduced sales figure.

Years ago I read that industry leading manufacturers spend 3% of sales
on IT. I'm not sure what planet they were referring to.

-Todd C.


-----Original Message-----
From: vantage@yahoogroups.com <mailto:vantage%40yahoogroups.com>
[mailto:vantage@yahoogroups.com <mailto:vantage%40yahoogroups.com> ]On
Behalf Of Bruce Butler
Sent: Wednesday, March 28, 2007 8:09 AM
To: vantage@yahoogroups.com <mailto:vantage%40yahoogroups.com>
Subject: [Vantage] [OT] IT budget survey

After seeing Todd's posting about spending 15K on a SAN solution, I
began wondering what, as a percentage of sales, other companies spend.
We typically have been planning an IT budget at around 1% of Gross
Sales. Last year's plan was .8% of Gross Sales. We ended up spending,
due to a 3 month slowdown in the business, .4%.

We define IT budget as all computer & software investments made
throughout the year. That includes things like software maintenance for
CAD/CAM, and such outside of "normal" IT purchases.

So as a survey, I figured it would be safe for this group to give a
spending value as a percent vs. sharing annual sales info. Could you
please respond simply as;

Planned .8%

Spent .4%

Any relevant notes.

I will try to tally and post results.

Thank you,

Bruce Butler, IT Manager

Knappe & Koester, Inc. < http://www.knappe-
<http://www.knappe-koester.com <http://www.knappe-koester.com> >
koester.com>

18 Bradco Street

Keene, NH

p. 603-355-1166

f. 603-355-2266

bbutler@knappe- <mailto:bbutler%40knappe-koester.com> koester.com

The information in this message is proprietary and/or confidential and
is intended only for the use of the individual(s) named above. This
message should not be forwarded without permission from the author. If
this message is received in error or otherwise by someone other than the
addressee, please contact the author at the above number and return the
message or destroy it. In addition, the recipient of this data agrees to
abide by the United States Export Control of Technical Data and
Equipment under the International Traffic in Arms Regulations (ITAR) and
Export Administration Regulations (EAR). The recipient agrees to abide
by these laws and their regulations not only for export and re-export,
but for disclosure to non-U.S. citizens.

[Non-text portions of this message have been removed]

[Non-text portions of this message have been removed]





[Non-text portions of this message have been removed]
Historically we've been running around 1%.

________________________________

From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf
Of Bruce Butler
Sent: Wednesday, March 28, 2007 6:09 AM
To: vantage@yahoogroups.com
Subject: [Vantage] [OT] IT budget survey



After seeing Todd's posting about spending 15K on a SAN solution, I
began wondering what, as a percentage of sales, other companies spend.
We typically have been planning an IT budget at around 1% of Gross
Sales. Last year's plan was .8% of Gross Sales. We ended up spending,
due to a 3 month slowdown in the business, .4%.

We define IT budget as all computer & software investments made
throughout the year. That includes things like software maintenance for
CAD/CAM, and such outside of "normal" IT purchases.

So as a survey, I figured it would be safe for this group to give a
spending value as a percent vs. sharing annual sales info. Could you
please respond simply as;

Planned .8%

Spent .4%

Any relevant notes.

I will try to tally and post results.

Thank you,

Bruce Butler, IT Manager

Knappe & Koester, Inc. <http://www.knappe-koester.com
<http://www.knappe-koester.com> >

18 Bradco Street

Keene, NH

p. 603-355-1166

f. 603-355-2266

bbutler@... <mailto:bbutler%40knappe-koester.com>

The information in this message is proprietary and/or confidential and
is intended only for the use of the individual(s) named above. This
message should not be forwarded without permission from the author. If
this message is received in error or otherwise by someone other than the
addressee, please contact the author at the above number and return the
message or destroy it. In addition, the recipient of this data agrees to
abide by the United States Export Control of Technical Data and
Equipment under the International Traffic in Arms Regulations (ITAR) and
Export Administration Regulations (EAR). The recipient agrees to abide
by these laws and their regulations not only for export and re-export,
but for disclosure to non-U.S. citizens.

[Non-text portions of this message have been removed]




______________________________________________________________________
This email has been scanned by the MessageLabs Email Security System.
For more information please visit http://www.messagelabs.com/email
______________________________________________________________________



[Non-text portions of this message have been removed]
In the past, my company hasn't had an IT budget. This will change with the
new fiscal year in July.

On 3/28/07, Mike Lowe <MLowe@...> wrote:
>
> Historically we've been running around 1%.
>
> ________________________________
>
> From: vantage@yahoogroups.com <vantage%40yahoogroups.com> [mailto:
> vantage@yahoogroups.com <vantage%40yahoogroups.com>] On Behalf
> Of Bruce Butler
> Sent: Wednesday, March 28, 2007 6:09 AM
> To: vantage@yahoogroups.com <vantage%40yahoogroups.com>
> Subject: [Vantage] [OT] IT budget survey
>
> After seeing Todd's posting about spending 15K on a SAN solution, I
> began wondering what, as a percentage of sales, other companies spend.
> We typically have been planning an IT budget at around 1% of Gross
> Sales. Last year's plan was .8% of Gross Sales. We ended up spending,
> due to a 3 month slowdown in the business, .4%.
>
> We define IT budget as all computer & software investments made
> throughout the year. That includes things like software maintenance for
> CAD/CAM, and such outside of "normal" IT purchases.
>
> So as a survey, I figured it would be safe for this group to give a
> spending value as a percent vs. sharing annual sales info. Could you
> please respond simply as;
>
> Planned .8%
>
> Spent .4%
>
> Any relevant notes.
>
> I will try to tally and post results.
>
> Thank you,
>
> Bruce Butler, IT Manager
>
> Knappe & Koester, Inc. <http://www.knappe-koester.com
> <http://www.knappe-koester.com> >
>
> 18 Bradco Street
>
> Keene, NH
>
> p. 603-355-1166
>
> f. 603-355-2266
>
> bbutler@... <bbutler%40knappe-koester.com> <mailto:bbutler%<bbutler%25>
> 40knappe-koester.com>
>
> The information in this message is proprietary and/or confidential and
> is intended only for the use of the individual(s) named above. This
> message should not be forwarded without permission from the author. If
> this message is received in error or otherwise by someone other than the
> addressee, please contact the author at the above number and return the
> message or destroy it. In addition, the recipient of this data agrees to
> abide by the United States Export Control of Technical Data and
> Equipment under the International Traffic in Arms Regulations (ITAR) and
> Export Administration Regulations (EAR). The recipient agrees to abide
> by these laws and their regulations not only for export and re-export,
> but for disclosure to non-U.S. citizens.
>
> [Non-text portions of this message have been removed]
>
> __________________________________________________________
> This email has been scanned by the MessageLabs Email Security System.
> For more information please visit http://www.messagelabs.com/email
> __________________________________________________________
>
> [Non-text portions of this message have been removed]
>
>
>


[Non-text portions of this message have been removed]
Bruce,

Our IT budget is currently identical to Todd's (meaning no "plan", just a
bunch of approved projects). Over the past 3 years, we've probably been in
the 2-3% of sales range (including salaries and everything remotely IT
related). During that time, we've been modernizing and we replaced
literally 95% of our computer hardware and software (including our purchase
of Vantage to replace a legacy system). We have improved processes and
productivity tremendously, so we have seen a good return on that investment.
After we go live with Vantage, I intend to establish a budget at around 1.5%
of sales so we can manage change and initiate business improvements rather
simply reacting to problems and stuff that broke.

Hope that helps,
Dan Snyder
IT Manager
Mercury Electronics
717-428-0222 ext.224



_____

From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf Of
Todd Caughey
Sent: Wednesday, March 28, 2007 9:41 AM
To: vantage@yahoogroups.com
Subject: RE: [Vantage] [OT] IT budget survey



Budget? What budget? This is really funny to me because I came here from a
small division of a very large multinational public corporation
(BHP-Billiton when it was just BHP) and budgets were very strict and
monitored each month. Now in a small private company if the departments
budget at all it is for the whole year and there is no review of budget vs.
actual. Instead of budget I have a wish list for capital equipment and
technology projects for the coming year with no guarantee any of it will be
approved until the President tells me, "we had a good month, so do #3 on
your list". Of course there are fixed operational costs such as comm.
services, maintenance renewals and most important MY SALARY and some of the
"technology initiatives are aimed at controlling these costs - or in the
case of salary saving me administrative time so we can dodge hiring an IT
Assistant. Some projects are actually intended to reduce other costs (most
often labor) elsewhere or (GASP!) provide some strategic advantages to the
company to increase sales.

Then there are "bolts from the blue"....such as acquiring another location
or finding out the 15yo phone system can no longer be maintained...if it
dies then it's find new system in a hurry....a $100K addition to IT
spending. These can make "actual" exceed "planned" and seem to happen
regularly enough they should be planned for...call it Project X.

Factoring all of the above (recurring expenses and new projects) I would
guess we typically run an actual 1% of gross sales IF sales are above a
fixed level that provides decent gross margins. If sales dropped and company
fixed overhead costs got to be too big a % of sales IT actual spending could
easily drop to .5% of the reduced sales figure.

Years ago I read that industry leading manufacturers spend 3% of sales on
IT. I'm not sure what planet they were referring to.

-Todd C.


-----Original Message-----
From: vantage@yahoogroups <mailto:vantage%40yahoogroups.com> .com
[mailto:vantage@yahoogroups <mailto:vantage%40yahoogroups.com> .com]On
Behalf Of Bruce Butler
Sent: Wednesday, March 28, 2007 8:09 AM
To: vantage@yahoogroups <mailto:vantage%40yahoogroups.com> .com
Subject: [Vantage] [OT] IT budget survey

After seeing Todd's posting about spending 15K on a SAN solution, I
began wondering what, as a percentage of sales, other companies spend.
We typically have been planning an IT budget at around 1% of Gross
Sales. Last year's plan was .8% of Gross Sales. We ended up spending,
due to a 3 month slowdown in the business, .4%.

We define IT budget as all computer & software investments made
throughout the year. That includes things like software maintenance for
CAD/CAM, and such outside of "normal" IT purchases.

So as a survey, I figured it would be safe for this group to give a
spending value as a percent vs. sharing annual sales info. Could you
please respond simply as;

Planned .8%

Spent .4%

Any relevant notes.

I will try to tally and post results.

Thank you,

Bruce Butler, IT Manager

Knappe & Koester, Inc. < http://www.knappe- <http://www.knappe-
<http://www.knappe-koester.com> koester.com> koester.com>

18 Bradco Street

Keene, NH

p. 603-355-1166

f. 603-355-2266

bbutler@knappe- <mailto:bbutler%40knappe-koester.com> koester.com

The information in this message is proprietary and/or confidential and
is intended only for the use of the individual(s) named above. This
message should not be forwarded without permission from the author. If
this message is received in error or otherwise by someone other than the
addressee, please contact the author at the above number and return the
message or destroy it. In addition, the recipient of this data agrees to
abide by the United States Export Control of Technical Data and
Equipment under the International Traffic in Arms Regulations (ITAR) and
Export Administration Regulations (EAR). The recipient agrees to abide
by these laws and their regulations not only for export and re-export,
but for disclosure to non-U.S. citizens.



.

<http://geo.yahoo.com/serv?s=97359714/grpId=20369/grpspId=1705007183/msgId=5
5804/stime=1175089287/nc1=3848547/nc2=3848640/nc3=3>



[Non-text portions of this message have been removed]