By Bart Perkins
Aug. 17, 2016
This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.
Many IT leaders complain constantly that they can’t satisfy their users because their budget doesn’t provide enough money for new services. Meanwhile, many unsatisfied users complain that IT should not be given more money until new services are delivered. It’s a vicious circle.
But there is always money somewhere, especially in a large and established enterprise. According to a recent Fortune magazine survey of private companies’ CEOs, 92% said they have all the cash they need to fund investments. In many cases, even literal bankruptcy isn’t an automatic impediment, since judges will approve expenditures that they believe are important for companies under their protection.
Although the best time to obtain more funding is during the annual budgeting process, money for opportune investments is almost always available throughout the year. The key is to prove that the need is truly compelling. To do that, the following four things must be in place:
- A compelling business case. The best business cases address a highly visible problem or opportunity. A data breach, a significant complaint from a major customer or another highly visible event can transform a problem from something that only IT understands to something that is widely acknowledged by the executive ranks. That simplifies the problem statement. But even without a highly visible challenge, the potential for significant cost reductions or new revenue sources can be presented as solid reasons for the organization to spend unallocated funds.
In making your argument, the assumptions in the business case need to be conservative, and the projections about benefits must be specific. One-time costs and benefits need to be separated from annual costs and benefits in order to make internal rate of return calculations easier. This allows reviewers to compare your proposal’s ROI to the return of competing investment requests. It’s also a good idea to calculate for contingencies, because CFOs, internal auditors and others in charge of approving funding requests are always wary that costs can be higher or benefits lower than projected.
The business case must be clearly written and easy to understand. Documents containing bad grammar or lacking clarity are usually judged to have been hastily written and therefore unimportant to the writer — sufficient reason to ignore them or dismiss them out of hand.
- An involved and committed executive sponsor. The executive sponsor of a proposed new system expects it to improve the way his department or business unit operates, and it is up to him to define the business problem, the business boundaries of the solution and the expected benefits. The best sponsors are politically savvy enough to be able to get other executives to support their program. They sense the prevailing winds and build coalitions around organizational priorities, and then they demonstrate how the proposed program supports those priorities.