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stumper

By The R00kie ·
My boss asked me the other day that for a company our size, what should we be spending on IT?
I had no idea how to answer him.

We are a private practice in the health care industry with about 150 employees spread out across 20 locations. We do no in house software development or anything. We run a client server app on win2003, office, and files shares, etc. Nothing to fancy. Finally, we do about $25mil a year in revenue. Our biggest challenges are serving that many remote locations, and improving the performance of our client server app across the WAN. We have a like grade C network at the moment, I am trying to move it to a grade A, at least grade B. I am trying to automate, and centralize things as well as do TS/Citrix, etc.


What do you think we should spend? Of course it depends on what your doing. If your building a new server that year then you will spend more. So I have no idea how to answer that.
Also, how much IT staff should we have, to do everything in house. (Support, maintenance, development of new infrastructure, etc.)
Right now I am the only one, lol.

If you are like me and have know clue how to answer this, can you think of a good way to find out? We are the largest practice our this type in the country so it is hard to find someone like us. What I would love to see is a list of companies with 100-200 emps, doing around 25mil, in the helthcare industry, and see what they spend and how many staff they have. I don't think thats in a database anywhere though.

Thank you for your time and input,

Dan

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You could pay someone

by JamesRL In reply to stumper

To do the math.

The Gartner group do survey companies on IT spending, and they would be able to give you information based on the Standard Industrial Classification (SIC) code.

What you wont get is something down the level of granularity that you want - comparing yours to another of your size. Be careful here - every company is different. You could compare yourself to another company in the same field and with the same number of employees, but if they have fewer locations, certain costs would be lower. The best you can really hope for is a range - if you know that companies in your SIC code spend between 3-5% of their total revenue on IT, and you spend 4.5, and you know you have extraordinary costs for ....networking, then thats a pretty good benchmark.

As for staffing, thats more difficult. Some companies emphasize resolving the call from the help desk and remote support, and staff up their help desk. Others rely more on desktop support techs at the desktop - one isn't right and the other wrong, its just different.

I did do this at a previous firm, and we had some challenges. Just determing what our "revenue" was had its challenges - ask your controller, its not always as simple as whats in the annual report. I found my company didn't fit neatly into one SIC code, so I blended two. And I had a year subsription to Gartner so they were helpful.

James

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Thank you.

by The R00kie In reply to You could pay someone

Thanks for the thoughtful response. I will look into this Gartner Group.

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Gartner Group? Are you kidding me? Look elsewhere!

by Why Me Worry? In reply to Thank you.

Gartner is one of the most biased and unrealistic companies to exist in this industry. They will come in and over-exagerate your costs, telling you that you need to allocate 50% to 80% more money to the IT budget than what you realistically need to operate.

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I guess

by The R00kie In reply to Gartner Group? Are you k ...

Your complaining because they tried to get you alot of money to operate?

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Have you asked for the data from Gartner?

by JamesRL In reply to Gartner Group? Are you k ...

Cause I have. And I poured over it for hours, worked with my CFO, made sure we did a valid comparison.

And guess what. We were spending below average, but not a huge amount below, a fraction of a percent. For our company we spend about 4.5% of revenue on IT, and other similar companies in our industry averaged 5%.

I've worked for a polling firm and know a fair amount of survey methodoligies and from my perspective, their method was sound.

And I would not disagree that they are too expensive. And they don't share my perspective on a lot of IT issues. But in this case they were spot on.


James

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Thanks

by The R00kie In reply to Have you asked for the da ...

I just found out about them. I got the impression from the site they were expensive and might not be for a business our size. I am going to look into it further. Good to know that their methodologies are sound though.

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A la carte

by JamesRL In reply to Thanks

I was a subscriber to them, which meant I got unlimited access to their publications and time with their analysts.

But you can just buy an individual publication. The costs range from the low thousands on up. the spending survey is pretty big, I would bet it is one of the more expensive items.

James

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Hope you have a defribrallator

by hammaren In reply to Gartner Group? Are you k ...

Gartner try to convince people they play in the SMB market but fuggetaboutit. Last time a friend worked for them they billed out at something like $7500 a day, and that was years ago. What you need is anecdotal info from people who play in that market. Our company does outsourcing in SMB. Our largest client is a bit bigger, but same number of locations from VA to MA, but mostly NJ. About five major apps, and very little programming in-house by us, and no IT people of their own. 10 servers, Exchange, Citrix, all supported by VPN to every site. We have two people essentially full-time plus a partner who manages them and bills about half-time there. Although these are estimates, I would say hardware and software expenditures are about $200K / year and our costs are about 1.5 to twice what employees would cost, but I have never seen a company with employees doing IT that were that productive, since we account for every task in our invoices.

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We could afford one day maybe.

by The R00kie In reply to Hope you have a defribral ...

If we had that much to spend, we would not need their advice.

When you say hardware and software, does that include T1s, phones lines, phone system, etc. or just the PCs, servers, and networking equipment?

I am very productive and I am not a contractor. Do you pay as much attention to detail as in house would? Do you do those tasks that you just can't bill for because they don't fit into any category? Thats the problem I had when I was an outside contractor. I like it much better working in house now. As I get more experience though I may go back to that.


Thank you for the input. We are near that number as well.

Dan

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Compare with Govt scetor

by IT-Fulano In reply to Gartner Group? Are you k ...

The budget for government sponsored/operated hospitals is generally public information. Get a few of these and compare with your operations. Govt operations are also usually bear-bones operations so you might get a more realistic figure. IMHO

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