Sacrificial budgeting

Routinely I hear people talk about industry benchmarking in terms of setting budgets. For example, if your competitor spent 5% of revenue on IT, or if most organizations your size spend $500K yearly on IT, and then you proceed to set your budget for IT at 5% of revenue or $500K.

This reminds me of ancient rituals of animal sacrifice. No real reason to do something other than everyone else does it and it’s largely a wasteful practice. Whatever you allocate to a budget will be spent. Whether it’s productive is another question.