Life Science IT Spending Driven by Greater Infrastructure Requirements

As with many high-tech enterprises, life science organizations make a substantial investment in information technology. Whether they are medical device manufacturers, pharmaceutical makers, biomedical firms, or other medical product companies, life science firms spend more on IT than the typical enterprise.

Life science companies support research and development efforts that enable them to innovate. They have complex products that require high-touch customer support and often include related professional and technical services. They also rely on enterprise systems and networks to keep highly skilled engineering, marketing, manufacturing, and sales personnel productive and informed in a collaborative environment.

And perhaps more than even most high-tech concerns, life science companies operate outsized data storage capacity and support scientific applications running on high-end systems.

While usually included within our high-tech sector metrics, life science organizations have some unique attributes that are important to understand when benchmarking IT spending in this sector. In our study, Comparative Analysis of IT Spending in the Life Sciences, we compare high-level spending metrics for life science companies against a broad sample of organizations in all industries that have participated in our benchmarking studies over the past four years.

The study has four key findings:

• Life science companies have high IT intensity. They spend considerably more than the composite sample, as measured by total IT spending per user and spending as a percentage of revenue.
• Life science companies spend a higher portion of their IT budgets on data center and network infrastructure than the average company, and they spend a correspondingly smaller portion on business application software.
• The size of the application support staff and spending on application software per user is typical, indicating that high data center and network infrastructure costs are the factors that drive IT spending in this sector.
• The staffing mix for life science companies is similar to other organizations. IT staffing headcount, therefore, can be benchmarked against similar-size organizations from all sectors.

For the comparative analysis, we use three measures of IT intensity: IT spending as a percentage of revenue, IT spending per user, and application spending per user. To determine where life science spending differs from the composite sample, we break down IT spending into five functional areas: IT management, applications, data center, network, and end-user support. We also examine IT staff headcount by those same functional areas. We conclude with our assessment of where life science organizations can focus their efforts to improve IT performance.

This Research Byte is a brief overview of our report on this subject, Comparative Analysis of IT Spending in Life Science Sector. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing)