Getting a green light: to get budget approvals in tight times, network managers have to be politicians and psychologists - The Bottom Line

Communications News, Sept, 2002 by Lenny Liebmann

Money is not exactly flowing into corporate networks today. In fact, the numbers from Forrester Research indicate that technology funding is dropping from an average of 3.5% of revenue to 3.0%. That makes budget approval a real challenge for network managers who know their companies need to expand and improve their communications capabilities.

In the past, networkers have tackled the budget approval process by focusing on ROI. The problem is that all the "R" in the world won't help you if you don't have the "I." Or, to put it another way, even if you can find 10 $50,000 technology solutions that will all deliver 400% ROI, you still can't buy them with a $400,000 budget.

ROI-based business cases, therefore, are by themselves insufficient for supporting strong technology spending at a time when business and financial managers have become a bit skeptical about the bottom-line benefits of new network buys.

Fortunately, there are some practical strategies for overcoming constrained resources and management skepticism. These include:

* Alignment

If a stated business goal of your company is a 10% increase in market share, then you can make a strong case for a 10% increase in network capacity--at least across sales and fulfillment areas. You don't have to come up with an ROI calculation for this one. It's a simple cost of doing business and meeting that goal.

* Alliance

If a technology is sufficiently well-aligned with a departmental business need, then it may even be possible to get them to pay for it. This is a great way to stretch limited IT buying power. Also, business units that are making their numbers are more likely to get approvals than IT groups that are seen as cost centers.

* Amortize

Financial managers often don't have a real objection to a buy; they just don't want to have to front-load the whole expense into a single quarter. So, if you can work out financing terms with a vendor in advance, do it. Also, if a network build out or other project can be staggered over time, there may be a better chance of getting management approval--even if you'd really prefer to get the whole thing done right away.

* ASP

Another way to avoid a big capital expense is to outsource and/or procure the solution on a subscription basis. There are ASPs and other service providers out there who can rent you virtually anything you need. CFOs often feel more comfortable with a service they can turn off any time they want than they are with building in-house capabilities that cannot be easily jettisoned, even if things go sour.

There's a lot of psychology to the budgeting game, too. If you consistently ask for things that you know you can't get, for example, then you eventually become one of those people who just seems to have "NO" stamped on his forehead.

Many savvy network managers have learned not to ask for things they know they can't get. That apparent reasonableness and conservatism does them much good when a real fight comes. It's also a good idea to avoid adversarial positions with the CFO and other decision makers. Statements like, "You don't understand this technology," or, "You didn't believe the Internet was going to do us any good, either," won't get you too far.

Of course, the truth is that most executives don't understand the technology and they missed the boat when it came to the Internet. But there's no use rubbing their noses in it. It's more' important to protect them from their own shortsightedness by ensuring that they make the technology investments they need to succeed. Because, whether or not they know it, their future depends on the quality of their networks.

Liebmann is an independent consultant specializing in the application of networking technologies to strategic business challenges. Send comments for publication to liebmann@comnews.com.