Digital budget discussions often contain a deceptively simple question: what are comparable firms spending?
Boards want an external reference point. Technology and marketing leaders want to know whether their plans are proportionate. Suppliers are often willing to provide a number. The difficulty is that a sector percentage can create false confidence when firms define “digital”, revenue, transformation and routine operating cost differently.
Peer evidence is still useful. It can expose a blind spot, show where expectations are changing and make an internal assumption easier to challenge. It works best as an input to judgement, rather than a target.
Why the headline benchmark disappoints
A professional services firm can count its website, CRM, cloud infrastructure, cyber security, data team, product development and AI experiments as digital investment. Another may place half of those costs in operations, risk or business development. Capital and operating costs may be mixed. Group functions may be allocated differently across regions.
Even a well-run survey therefore needs careful interpretation. A range across a broad category says little about what a particular firm should spend next year.
The commercial context differs too. A firm whose clients complete frequent transactions through digital channels has a different exposure from one selling a small number of bespoke engagements. A business carrying years of platform debt may need a temporary increase. A firm that modernised recently may be able to invest more in service improvement and less in remediation.
The useful comparison is more specific: what problem are peers addressing, which capability are they strengthening, and what evidence would show that the investment worked?
Compare the portfolio, not one percentage
We find it helpful to examine digital investment across Distinction's six Critical Pillars. They separate activities that are often collapsed into one technology budget.
Strategy
This covers choices about target clients, service propositions, priority journeys, investment sequence and governance. Peer activity may reveal that a sector is moving from isolated projects towards managed portfolios, or that digital ownership is moving closer to the business.
Look for the decisions being enabled. Spending on a roadmap has little value if nobody has authority to stop lower-priority projects or redirect money as evidence changes.
Experiences
Websites, portals, onboarding, self-service and other client or colleague journeys sit here. Compare the tasks firms are making easier and the audiences they serve. A visual redesign is different from reducing application abandonment or making technical knowledge usable during a buying decision.
The evidence may include completion, qualified enquiry, avoidable contact, time to value, accessibility and client confidence. Traffic alone rarely settles the case.
Platforms
Content management, integration, hosting, identity and other foundations enable the visible experience. Some spending keeps a service safe and supported; some creates new capability; some compensates for accumulated complexity.
Separate those purposes. A large platform budget can signal prudent renewal or a costly legacy burden. Compare architecture decisions and operating consequences before treating the amount as good or bad.
AI
Public announcements make AI investment particularly hard to benchmark. A licence trial, a production workflow and a firm-wide capability programme are not equivalent. Ask which use cases have passed assurance, which data they rely on, how quality is evaluated and what business outcome changed.
The absence of a large AI budget may reflect discipline. Conversely, a visible programme may still lack adoption or a credible owner.
Workflows
Workflow investment connects client experience with the way work is delivered. It may involve intake, case or engagement progress, approvals, content operations and reporting.
This category is easily hidden inside departmental budgets. It is also where modest changes can remove recurring effort without a major front-end launch. Compare cycle time, hand-offs, rework and exceptions.
People
Training, product ownership, research, service design, data stewardship, adoption and change capacity belong in the investment picture. Buying a platform without funding the people who operate and improve it understates the true cost.
Peer comparison should include operating model and capability, not just technology procurement.
Build a defensible peer view
No single report will answer the budget question. A stronger view combines several types of evidence.
Define the peer group
Choose firms with meaningful similarities: proposition, client type, regulatory environment, geography, size and digital intensity. A global multidisciplinary network may be an interesting direction-of-travel signal for a regional specialist, although its spending is a poor direct comparator.
Include challengers and adjacent competitors where client expectations may move between categories. The aim is to understand the market the client experiences, not to reproduce a league table.
Inspect observable services
Review what clients can actually do across competitor websites, portals and service journeys. Use repeatable tasks rather than impressions. Can a prospect understand specialism and evidence? Can a client start, pause and resume a process? Is help available at a consequential moment? Does the experience work with a keyboard and on a small screen?
Record the date, route, device and limitations of the observation. Some capabilities may sit behind authentication, so say what could and could not be assessed.
Use published evidence with its definitions attached
Analyst reports, annual reports, regulatory publications and sector studies can show investment themes. Capture sample, geography, fieldwork date, definitions and whether the finding is correlation, reported intention or observed outcome.
A statistic detached from those conditions should not enter a board paper. Current primary or official sources deserve preference for material claims; vendor research may still be useful when its commercial interest and method are visible.
Speak to the market
Clients, recruits, technology partners and recent joiners can explain which differences matter. Ask about specific decisions and tasks. “Who has a good digital experience?” produces admiration; “what made it easier to shortlist or work with a firm?” produces evidence.
Respect confidentiality. Competitor intelligence does not justify seeking private information or presenting inference as fact.
Turn comparison into a decision
Create a one-page view for each proposed investment:
- the commercial or operational problem
- the relevant peer signal and its strength
- the firm's current performance and constraints
- the cost of maintaining the present position
- the smallest credible intervention
- the measure and date for the next decision
This changes the conversation from “are we spending enough?” to “which capability needs to improve, and why now?”
The benchmark can then play one of four roles. It may confirm a priority already supported by client and operational evidence. It may expose a risk the firm has overlooked. It may show that a proposed feature is merely table stakes. Or it may reveal that competitors are investing heavily in something irrelevant to the firm's strategy.
Divergence can be intelligent. A specialist consultancy may choose a restrained website and invest in a distinctive diagnostic experience. A law firm may postpone an AI feature while fixing knowledge permissions. A financial firm may spend first on recovery and assisted service because those journeys create greater client and regulatory risk.
Avoid three common budget errors
First, do not classify all maintenance as transformation. Keeping a supported, secure service running is essential, yet it does not automatically create new value. Make both costs visible.
Second, do not copy a competitor's interface without its operating model. A polished portal depends on data, service ownership, support and continuous improvement. The visible layer can conceal most of the investment.
Third, do not use a benchmark to bypass prioritisation. Matching a sector average can still fund the wrong work. Every substantial item needs an owner, an outcome and a decision point.
A better board conversation
Bring three views together: external movement, internal performance and strategic intent. External movement explains what clients may come to expect. Internal performance shows where the firm is losing time, confidence or opportunity. Strategy determines which gaps matter.
For planning under constraint, see how to plan digital investment when budgets are tight. The related discussion of technical debt and board decisions helps separate unavoidable upkeep from investment that changes capability.
If you want to see where your firm sits relative to peers in your specific sector, book a benchmarking conversation with us. If you'd prefer a structured template for mapping your current investment allocation across the four categories against the sector benchmark, download the digital investment comparison template. It takes about twenty minutes to complete and gives you something concrete to take into your next budget discussion.
We're also publishing sector-specific editions of this analysis - legal, financial services, and consulting - over the coming months. Let us know if you want to be notified when your sector's edition goes live.
The firms pulling ahead right now aren't necessarily smarter than you. They just know what the benchmark looks like. Do you?
