If you lead a mid-market company, technology spend can feel like a rigged game. Every vendor has a “must-have” platform, your team wants more tools, and the board wants lower cost and lower risk at the same time.
You are not alone if you are asking, “Are we spending too much, or not nearly enough?” That question is hard to answer from inside your own four walls.
This is where external benchmarks come in. Benchmarks are outside data about how similar companies invest in technology, cloud, AI, and cybersecurity, how much they spend, and what returns or risk levels they see. Used well, they turn fuzzy conversations into grounded decisions.
In practical terms, How Executives Use External Benchmarks to Guide Technology Investment comes down to a simple idea: compare yourself to the right peer group, then use that view to decide what to fund, what to fix, and what to delay. This article shows a straightforward way to do that so you can spend with confidence, answer board questions clearly, and avoid both overspending and under investing in the systems that run your business.
What External Benchmarks Are And Why Smart Executives Use Them
External benchmarks are outside points of reference that help you see whether your technology and cybersecurity spend is high, low, or reasonable compared to similar companies. They give you a yardstick.
Firms like Gartner, McKinsey, Deloitte, and Forrester publish research on where money is going, what “good” looks like, and which capabilities are now standard in your sector. For example, overall IT spending is expected to keep rising as companies shift toward AI, cloud, and security, according to recent work from Gartner and others, such as the global forecast shared in Gartner’s 2025 IT spending outlook.
For you, the pressure is real. Boards, lenders, and investors are reading this same research. They ask pointed questions:
- Why is our IT spend above peers?
- Are we behind on AI or cloud adoption?
- Is our security maturity acceptable for our risk profile?
Benchmarks help you answer without guessing. Reports like Forrester’s IT and digital services benchmark and McKinsey’s technology trends outlook give a context that an internal dashboard never will.
Used well, benchmarks do not replace judgment. They give you a clearer starting point for executive judgment.
Simple Definition: External Benchmarks For Technology Investment
At an 8th grade level, here is the idea:
External benchmarks are outside data and examples that show how companies like yours invest in technology, cloud, AI, and cybersecurity, and what results they get.
Simple examples include:
- IT spend as a percent of revenue, by industry and size
- Security incidents per year, for companies at different maturity levels
- Average uptime, for critical systems in your sector
- Share of workloads in the cloud, for similar businesses
The key benefit is that benchmarks shift the debate. Instead of “my opinion versus your opinion” or “this vendor says it is best in class,” you can have a fact-based discussion anchored in peer data.
Common Types Of Tech Benchmarks Executives Rely On
A few benchmark types show up in almost every board pack, even if they are not labeled that way.
| Benchmark type | Simple business question it answers |
|---|---|
| IT spend as percent of revenue | Are we overspending or under investing on tech compared to our peers? |
| Cloud and SaaS adoption levels | Are we modern enough to stay efficient, or stuck in legacy systems? |
| Cybersecurity maturity and spend | Are we carrying more cyber risk than similar firms would accept? |
| Digital and AI adoption metrics | Are we using data and AI to grow, or leaving money on the table? |
| Reliability and resilience metrics | Are outages and incidents hurting us more than they hurt competitors? |
For mid-market leaders, the most practical starting point is IT spend as a share of revenue. Recent benchmarks for mid-sized firms place typical IT spend in the 3 to 7 percent of revenue range, depending on industry, as discussed in analyses like IT Spending Benchmarks for 2025 and Beyond. Where you sit in that range, and why, is the real story.
How Executives Use External Benchmarks To Guide Technology Investment Decisions
So how do you actually use benchmarks in the room, with your CFO, your head of IT, and your board?
The pattern that works is simple: get a clear picture of today, compare to the right peers, then turn the gaps into a focused roadmap and a better story for stakeholders.
Step 1: Map Your Current Tech Spend And Risk In Plain Language
First, you need a clean, executive-level picture of where the money goes today. Not a 60-tab spreadsheet, just a high-level map.
Break spend into a few buckets:
- Operations systems that run finance, supply chain, and HR
- Customer-facing tools like CRM, websites, mobile apps, portals
- Data, analytics, and AI tools
- Cybersecurity and compliance
- “Keeping the lights on” infrastructure and support
Capture a few simple facts:
- Total annual tech spend
- IT spend as a percent of revenue
- Top 5 vendors by spend
- Top 3 technology risks or outage patterns
This picture does not need to be perfect. It just needs to be clear enough to compare to peers.
Step 2: Compare Yourself To Relevant External Benchmarks, Not Shiny Outliers
Next, pick benchmarks that actually match your reality. That means similar:
- Revenue range
- Industry and regulatory burden
- Digital maturity and business model
Avoid copying the spend levels of big tech or unicorns. Their economics, margins, and risk appetite are different.
Look at ranges, not a single magic number. For example, if peers in your sector usually spend 3 to 5 percent of revenue on IT, and you are at 6.5 percent, you now have a flag to investigate. Deloitte’s technology industry outlook shows how this spread plays out as cloud, AI, and cybersecurity absorb a larger share of spend.
A simple mid-market example:
- You discover your company spends more than peers on on-premise infrastructure and custom legacy systems.
- At the same time, your cybersecurity and automation spend sit below peer norms.
That pattern says, “We are paying extra to protect and maintain old tech, while under investing in security and productivity.”
Step 3: Turn Benchmark Gaps Into A Focused Tech Investment Roadmap
Once you see the gaps, the point is not to chase every one. The point is to turn them into 3 to 5 clear, business-linked priorities.
For example, you might set goals like:
- Reduce unplanned outages on core systems by 50 percent
- Cut vendor sprawl and unused licenses by 20 percent
- Raise cybersecurity maturity from “below peers” to “in the pack”
- Shift a defined share of workloads to cloud over 18 months
Benchmarks help you decide what is “good enough” and where you genuinely need to catch up. You can also balance:
- Quick wins that free up cash, like pruning unused SaaS tools
- 12 to 24 month bets in areas like cloud, data, AI, and security
When you show the board a roadmap linked to benchmark gaps, you move from “trust me” to a neutral story: here is where we are, here is where peers are, and here is what we will do about it.
Step 4: Use Benchmarks To Push Back On Vendors And Protect The Budget
Benchmarks also give you a shield against vendor-driven agendas.
When a vendor proposes a large new platform, you can ask:
- How does this investment compare to what similar companies spend?
- What results should we expect in 12 months, based on industry data?
- Where will we reduce spend elsewhere so total IT cost stays within a healthy range?
This shifts the tone. Instead of debating features, you are testing each proposal against peer-based expectations.
Executives who do this well redirect money away from low-return projects and toward areas that almost always pay off, such as automation, core system stability, data quality, and security hardening.
Step 5: Report Results Back Using Simple Benchmark-Based Metrics
Finally, close the loop by reporting progress in benchmark terms. Boards and lenders listen when you can say:
- “We moved from bottom quartile to middle of the pack on security maturity.”
- “We held IT spend at 4 percent of revenue, which keeps us in line with peers, while reducing outages by 30 percent.”
You do not need a huge KPI tree. A handful of clear metrics, tied to external references, built into your quarterly rhythm is enough.
This builds trust. Technology conversations become less emotional and more like other financial and risk discussions.
Avoiding Benchmark Traps: How To Use External Data Without Losing Your Strategy
External benchmarks are powerful, but they can also mislead if you treat them as a rigid rulebook. Mid-market leaders, in particular, cannot afford to chase every trend headline they see in reports or on sites like MeaningfulTech’s mid-market spending analysis.
The goal is to use benchmarks as a guide, not as a script.
Pitfalls: Copying Big Tech And Chasing Every Trend
A few common traps show up over and over:
- Copying big tech spend levels. Their 8 to 10 percent of revenue on IT does not fit a 10 million or 80 million business with thinner margins.
- Using global averages that ignore your industry. A heavily regulated financial firm should not copy a light-touch services company.
- Chasing cloud or AI numbers from headlines. Investing in AI because “everyone is spending on it” without a clear use case just burns cash.
- Obsessing over tools, not outcomes. A new platform with no clear link to sales, margin, or risk reduction is just noise.
Benchmarks should spark questions, not blind imitation.
Best Practices: Keep Benchmarks Tied To Your Strategy, Customers, And Risk
A simple mindset keeps you grounded:
- Pick a peer group that matches your size, sector, and risk profile.
- Link every benchmark gap to a clear outcome, such as faster sales cycle, fewer outages, lower cyber risk, or better customer experience.
- Revisit key benchmarks at least once a year as your business and the market change.
- Use external benchmarks alongside your own data, not instead of it.
Many leaders find value in a neutral advisor who can sit on their side of the table, interpret the data, and turn it into a believable roadmap. A seasoned fractional CTO, CIO, or CISO can connect benchmarks with your growth plan, culture, and constraints so technology supports the business instead of distracting it.
Conclusion: Turn Outside Data Into Inside Confidence
Technology will always feel expensive and risky if you have no yardstick. The executives who sleep better follow a simple pattern: they map current spend and risk in plain language, compare to the right peer data, focus on a short list of high-impact moves, and ignore the noise from big tech and vendor hype.
Used this way, external benchmarks give you more confident board and lender conversations, less waste, and a technology roadmap that actually supports growth and trust.
If you want help turning benchmarks into a clear plan for your own company, explore how CTO Input uses them inside its expert fractional technology leadership model for CTO, CIO, and CISO support. For ongoing ideas on technology, risk, and growth that speak your language, you can also dive into more practical technology and cybersecurity guidance on the CTO Input blog.