Run/Change Rates in IT: Finding the Right Balance
When it comes to budgeting for IT, one of the key decisions that organizations need to make is how to balance spending on “run” activities (i.e., maintaining and supporting existing systems) versus “change” activities (i.e., investing in new projects and initiatives that drive innovation and growth). This balance, known as the run/change rate, can have a significant impact on an organization’s ability to adapt to changing business needs and stay competitive in today’s fast-paced digital landscape.
What is the Ideal Run/Change Rate for IT Spending?
The ideal run/change rate for IT spending can vary widely depending on the organization and its specific needs. While some experts suggest that a run/change rate of 70/30 may be appropriate for some organizations, this is just a rough guideline and not a one-size-fits-all approach.
In general, a higher run rate may be appropriate for organizations with a large investment in legacy systems that require ongoing maintenance and support. This may be especially true for organizations in industries such as finance or healthcare, where system stability and security are critical. On the other hand, organizations that are focused on innovation and digital transformation may have a higher change rate, as they invest more heavily in new projects and initiatives that drive growth and competitive advantage.
Examples of Run/Change Rates in IT by Industry Sector
While run/change rates for IT spending can vary widely depending on the organization and its specific needs, there are some industry sectors that tend to have higher run rates due to their reliance on legacy systems and the need for system stability and security. Here’s a broad overview of run/change rates in IT for different industry sectors:
- Financial services: Financial services organizations tend to have a high run rate due to the need to maintain and support legacy systems and meet stringent regulatory requirements. As such, their run/change rates may be around 80/20 or higher.
- Healthcare: Healthcare organizations also tend to have a high run rate due to the need for system stability and security. Their run/change rates may be around 75/25 or higher.
- Government: Government agencies often have a high run rate due to the need to maintain and support legacy systems and ensure system security. Their run/change rates may be around 70/30 or higher.
- Manufacturing: Manufacturing organizations may have a lower run rate than other sectors, as they tend to have fewer legacy systems and a greater focus on innovation and digital transformation. Their run/change rates may be around 60/40 or lower.
- Technology: Technology companies may have a lower run rate than other sectors, as they tend to be more focused on innovation and digital transformation. Their run/change rates may be around 50/50 or lower.
Finding the Right Balance for Your Organization
Ultimately, the ideal run/change rate for an organization will depend on its specific needs and strategic priorities. It’s important for organizations to carefully evaluate their IT spending needs and balance the costs and benefits of maintaining existing systems versus investing in new projects and initiatives.
By finding the right balance between run and change activities, organizations can ensure that they are effectively managing their IT spending, staying competitive in their industry, and positioning themselves for long-term success.
References:
- Gartner, “Run IT Like a Business: IT Spending and Staffing Benchmarks, 2018”
https://www.gartner.com/en/documents/3876169/run-it-like-a-business-it-spending-and-staffing-benchm - CIO.com, “IT Budgeting: How to Do It Right”
https://www.cio.com/article/3238614/it-budgeting-how-to
