IT Key Metrics Data 2022: Industry Measures —

Retail and Wholesale Analysis

Published 16 December 2021 - ID G00752539 - 11 min read
By Analyst(s): Eric Stegman, Jamie Guevara, Shreya Futela, Sneha Sharma, Nick
Michelogiannakis, Shaivya Kaushal

Initiatives: IT Cost Optimization, Finance, Risk and Value

Gartner collects IT Spending and Staffing data from the IT Budget

Tool and other sources on a year round basis. This data is based
on the Gartner Industry IT Spending and Staffing Framework to
ensure consistency. This analysis provides insight into metrics for
the Retail and Wholesale Industry from that dataset. CIOs and IT
Leaders should measure and benchmark their organization’s IT
metrics using the IT Budget Tool. These benchmarks can be part
of a program to improve cost management through transparency
and regular calibration as a best practice.

Overview
Key Findings
■ All of the metrics published in this report are based on the IT spending and staffing
model outlined in the Framework Definitions document.

■ The 2021 Retail and Wholesale industry median IT spending as a percent of revenue
is 1.7%, up from 1.6% in 2020.

■ The 2021 Retail and Wholesale industry median IT spending as a percent of

operating expense is 1.7%, same as in 2020.

■ The 2021 Retail and Wholesale industry median IT spending per employee is $5,320,
up from $5,155 in 2020.

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Recommendations
■ Use the Gartner IT Budget Tool to establish a baseline comparison report of your IT
spend and staff levels to:

■ Put IT spending and staffing into perspective for stakeholders by developing

comparable external reference points.

■ Track IT spending and staffing consistently over time.

■ Identify the sources of IT spending and variances from peers in order to

support optimization activities.

Benchmarking is a foundational component of cost management and

mature IT financial management practices.
As CIO’s and IT leaders evolve IT financial management practices, benchmarking
continues to be a foundational capability to identify opportunities for smarter spending.

Figure 1: 4-Step process to Identify Opportunities for Smarter Spending

To support Step 1, the Gartner IT Budget Tool can help to analyze costs vs. the industry to
identify optimization opportunities.

The resources below are available to support your cost benchmarking exercise.

■ Refer to Framework Definitions and Frequently Asked Questions to understand the

scope and definitions of Enterprise IT spending and staffing.

■ Use IT Budget Practitioners Guide and IT Budget Data Collection Toolkit to prepare
your IT spending and staffing data for comparison.

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■ Review IT Budget Next Steps document to help interpret your benchmark.

■ At any time during the process you can schedule an inquiry to get assistance with
completing the IT Budget Tool, or to review your results.

Access is dependent on your level of Gartner subscription.

IT Investment Measures
Total IT Spending/Budget

“Total IT spending” analysis is based on the definition below.

The best estimate of total spending at the end of the 12-month budget period for IT to
support the enterprise. IT spending/budget can come from anywhere in the enterprise that
incurs IT costs, and it is not limited to the IT organization. It includes estimates by
enterprises on decentralized IT spending and or “shadow IT.” It is calculated on an
annualized ‘cash flow view’ basis, and, therefore, contains capital spending and
operational expenses, but not depreciation or amortization.

Figure 2: Total IT Spend

Total IT Spend is further defined in "IT Key Metrics Data 2022: Industry Measures —
Framework Definitions."

IT Spending Percent Change

IT spending percent change helps to put context around the directional movement of
annual IT spending/budget levels.

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Figure 3: IT Spending Percent Change

Agility: Revenue Percent Change Versus IT Spending Percent Change

Revenue percent change versus IT spending percent change identifies the relationship
between IT investment and key business pressures. Is the business growing revenue, and
at what rate? Is IT spending/budget moving in the same direction? Is the change in IT
spending leading or trailing revenue change?

Mapping year-over-year business growth to IT budget growth can be a powerful tool to

understand the role that IT plays in the evolution of the business.

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Figure 4: Agility: Revenue Percent Change Versus IT Spending Percent Change

Agility: Operating Expense Percent Change Versus IT Spending Percent Change

Operating expense percent change versus IT spending percent change highlights the
relationship between IT and the business spending (for example, decreased spending in IT
and increased spending on operating expenses can sometimes indicate that the business
has not recognized value from its IT investments).

Plotting the growth in business operating expenses alongside year-over-year IT investment

growth can give a better sense of business and IT alignment, especially when viewed over
multiple years.

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Figure 5: Agility: Operating Expense Percent Change Versus IT Spending Percent Change

Gartner Cost Value Matrix: Finding the Right Balance Between Your IT Cost Optimization and
IT Investment Efforts

The Gartner cost value matrix (CVM) provides insight to ensure that cost optimization
plans maximize business value as well as reduce costs by evaluating IT spend levels
within the context of revenue and operating income levels.

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Figure 6: Gartner Cost Value Matrix: Distribution of Enterprises by Quadrant

Recommended Reading

■ "The Gartner Cost Value Matrix: Optimize IT to Fund Digital Business Acceleration"

■ "Tool: The Gartner Cost Value Matrix, 2021: Balancing Business Value Metrics in
Cost Optimization Efforts"

IT Spending as a Percent of Revenue

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IT spending as a percent of revenue is the most recognized measure of total IT investment
relative to top-line business results. Note that IT spending as a percent of revenue is
calculated based on the current year’s IT spending, divided by the previous year’s revenue.
We make the calculation in this way because the IT budget for a future year is based on
experience from the current year. However, for practical reasons, we use the previous
year’s revenue because the current year’s financial information is not available to us at the
same time as the IT spending numbers. Therefore, this year’s report reflects more of the
impact from the global pandemic than the 2021 report did from a revenue perspective. It
shows more of the rebound from the pandemic from an IT spending perspective.

There were different pandemic related issues for this industry depending on the nature of
each business. Online retail was able to thrive while traditional bricks and mortar faced an
uphill battle. Overall revenue increased by 0.5% in the latest available period. IT spending
increased by 6.0% due easing of restrictions and the need to enhance online business
models. This led to an increase in IT spending as a percentage of revenue. The 2022
projection is based on our participants' average estimated increase of 6.2% in IT spending
and an estimated industry revenue increase of 8.1%.

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Figure 7: IT Spending as a Percent of Revenue

IT Spending as a Percent of Operating Expense

IT spending as a percent of operating expense is another view of IT investment level in

terms of the role IT plays in overall business spending patterns.

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Figure 8: IT Spending as a Percent of Operating Expense

IT Spending per Employee

IT spending per employee is often used to determine the amount of IT support the average
organization’s workforce receives. For IT spending per employee both the data for the
numerator and denominator (IT spending and employees) were collected for the current
year (2021). As the employee count is calculated on a full-time equivalent basis, we see
the effects of company staffing changes that occurred in 2020 and continued into 2021
relative to the pandemic. Issues related to staffing shortages in 2021 may also come into
play in keeping staffing levels low. Lower levels of company staff tend to push up the IT
spending per employee metric.

Based on the data it appears that on average IT spending increased at a faster rate than
the number of employees. Therefore, we saw an increase in IT spending per employee.

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Figure 9: IT Spending per Employee ($000 USD)

IT Full-Time Equivalents as a Percent of Employees

IT FTEs as a percent of employees is a key measure of IT support and IT intensity from a

human capital perspective.

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Figure 10: IT FTEs as a Percent of Employees

Business Productivity Ratios

Revenue per Employee

Revenue per employee can help determine employee productivity in terms of revenue
generation intensity. This measure is typically influenced by the company business model
and staffing strategy. Enterprises with highly labor-intensive operations tend to generate
lesser revenue per individual as compared to those enterprises which are highly
automated. Effective and efficient uses of IT enable business processes to be
streamlined, thus increasing employee productivity in terms of business results. While
revenue may represent top line business results, it does not represent an organization’s
ability to generate income. This measure should be considered within the context of the
enterprise operating model which drives operating income and profit margin as well as
within the context of the total workforce strategy.

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Figure 11: Revenue per Employee ($000 USD)

Operating Income per Employee

Operating income per employee is often employed as a measure of cost efficiency and
productivity at an enterprise level.

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Figure 12: Operating Income per Employee ($000 USD)

Profitability

Profitability is a measure of an enterprise’s cost-efficiency and can help outline the

enterprise’s position relative to the industry as it is often related to investment patterns.

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Figure 13: Profitability

IT Resource Distributions

Up to this point, the figures have shown the overall spending and staffing trends, without
distinguishing between the strategic, financial or operational categories that compose
them. Through these categories, you can draw conclusions about critical investment
areas, key investment themes and competitive spending and staffing levels.

IT Spending by Funding Source

IT spending can come from various sources within an enterprise or an organization and is
not restricted to the formal IT budget. Additional spending can occur within business unit
budgets and be what is known as “shadow IT.”

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Figure 14: IT Spending by Funding Source

See "Quick Answer: The Difference Between Shadow and Business-Led IT, and Why It
Matters" for more details.

IT Operational Versus Capital Spending

IT operational versus capital spending helps to portray the IT investment profile of an

organization in a given year.

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Figure 15: IT Operational Versus Capital Spending

For more information, see "CIOs Must Master Four Views of Spend to Manage IT
Finances."

Strategic IT Spending Portfolio: Run, Grow and Transform the Business IT Spending

The distribution of IT spending to run, grow and transform the business provides a view of
the IT investment profile or “portfolio” to support business performance. In some
industries, it is not uncommon to see a high “run” focus — typically because organizations
in the industry are not planning strong changes in business model growth or high organic
growth — which often translates into a more “cost center” role for IT in the industry or
niche sector.

The run, grow and transform business framework should always be viewed in business
terms with respect to how IT will enable the business to grow or transform revenue,
operating income and/or profit margins.

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Figure 16: IT Spending to Run, Grow and Transform the Business

Deriving IT value from Run, Grown and Transform Business Framework

For more information on run, grow and transform the business, see "Strategic Cost
Optimization: Link Cost Decisions to Strategic Priorities."

IT Spending by Asset Category

The distribution of spending between asset categories outline the asset based cost
controls to manage IT investments.

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Figure 17: Distribution of IT Spending by Asset Category

Distribution of IT Spending and Staffing by IT Technical Function

The distribution of IT spending and staffing by IT technical function provides a view of

key IT resource consumption in the context of the overall IT portfolio.

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Figure 18: Distribution of IT Spending and Staffing by IT Technical Function

Distribution of IT FTEs: Insourced Versus Contractor

The distribution of IT FTEs (insourced versus contractor) can help provide a view of the IT
staffing strategy.

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Figure 19: Distribution of IT FTEs: Insourced Versus Contractor

For more information, see "Gartner’s Guide to Maximizing Your Agency Relationships."

Additional offerings

Leverage the Gartner IT Budget Tool to generate a comparison report of your IT metrics
vs. published industry metrics on an ongoing basis.

Additionally, access your organization in other business towers using:

IT Key Metrics Data Comparison Tool: Data Center & Network

IT Key Metrics Data Comparison Tool: Digital Workplace Services

IT Key Metrics Data Comparison Tool: IT Service Desk

IT Key Metrics Data Comparison Tool: Applications

IT Key Metrics Data Comparison Tool: IT Security

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Conclusion
A successful IT performance measurement program communicates metrics that are
important to a target audience. This remains true when communicating IT investments to
the business. The metrics and benchmarks that Gartner has identified here provide a high-
level view of current trends in IT by industry. They also reveal trends in business
alignment, staffing, technology and outsourcing. They can be used to assist in
communicating alignment with the business and in evaluating targets in key technology
areas. They provide context for key business decisions and internal performance
measures.

Recommended by the Authors

Some documents may not be available as part of your current Gartner subscription.

"Strategic Cost Optimization: Link Cost Decisions to Strategic Priorities"

"Cost Optimization Lessons Learned Through a Crisis"

"Research Roundup for Digital-Outcome-Driven Metrics for Industries"

"Create and Communicate an Enterprise Cost Optimization Roadmap"

"The Quintessential Guide to Strategic Planning"

"Strategic Cost Optimization Score for IT"

"Proactively Manage the Impact of SaaS on Opex and Capex Budgets"

Evidence
■ This research contains relevant database medians and ranges from a subset of
metrics and prescriptive engagements available through Gartner Benchmark
Analytics consulting-based capabilities.

■ Employee, income and revenue data is based on the most recently completed fiscal
year.

■ Calculations were made using worldwide observations.

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■ Retail and Wholesale Data Demographics: ITKMD 2022 cohort represents over $13
trillion in total revenue and over $590 billion in total IT spend. This analysis
represents a database median of all Retail and Wholesale organizations in the IT
Key Metrics Data 2022: Key Industry Measures dataset.

■ Table 1 outlines the number of observations and the average size of the
organizations (annual revenue and number of employees) represented in the
analysis.

Table 1: Number of Observations, Average Revenue and Enterprise Employees

2020
2021
Number of Revenue
Industry Employees
Observations (Billions of
(Thousands)
USD)

Retail and 161 8.1 33

Wholesale

NOTES: (1) The revenue figures reported are final and official for 2020; the 2021 revenue
figures were not announced or were otherwise unavailable at the time of this publication.

Source: Gartner IT Key Metrics Data (December 2021)

■ Revenue Size Categories: To offer high-level insight into the effect of business scale
relative to IT investment, this report will look at five environment scales within our
represented data for selective metrics, in terms of USD revenue size as defined
below.

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Figure 20: Distribution of Data by Revenue Size

Document Revision History

IT Key Metrics Data 2021: Industry Measures — Retail and Wholesale Analysis - 18
December 2020

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Table 1: Number of Observations, Average Revenue and Enterprise Employees

2020 Revenue (Billions of

Industry Number of Observations 2021 Employees (Thousands)
USD)

Retail and Wholesale 161 8.1 33

NOTES: (1) The revenue figures reported are final and official for 2020; the 2021 revenue figures were not announced or were otherwise unavailable at the
time of this publication.

Source: Gartner IT Key Metrics Data (December 2021)

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