APPENDIX C

How To Get a Company to Spend Money for Something You Need and Want


Many System Managers are in the awkward position of having a great deal of responsibility for one of their company's most valuable assets - its information - yet having very little authority to act to preserve that information or care for it, particularly when it comes to purchasing authority. The reason for this is entirely within your control as the System Manager.

Get the idea that there are two hats you wear as System Manager: One is the responsibility for ensuring that the computer system produces the products and services required of it for the company. The other is the responsibility to act in the best interests of the company in all things. The first is the System Manager hat and the second is the staff member hat. Doing what is best for the system and its users is the System Manager hat. Doing what is best for the company is the staff member hat.

These two hats are usually in sync; what is best for one is best for the other. But there are occasions when the two seem to conflict. Nowhere is this more evident than in purchasing. For example, the CPU is saturated and really needs to be upgraded. Clearly, a bigger CPU is in the best interests of the computer and its users. But how does the (substantial) cost of that CPU affect the company's interests?

If the CPU upgrade costs $100,000, you may find considerable resistance to your spending that much money, particularly if your spending authorization limit is $500. No one doubts that you know what is best for the computer and its users. What they are concerned about is that you do not know what is best for the company. Perhaps that $100,000 could be spent much more profitably elsewhere in the company. How would a System Manager know? He knows nothing of profit and loss, return on investment, or tax and balance sheets, right? Wrong. You know all you need to know of these things already. I'll show you.

If you have read Appendices A and B, in this book, and worked through the worksheet in Appendix B, then you already have a clear idea of the terrific value of a computer system to the company. You know that it can enormously increase the production and income of an area. You know that it can be a great burden financially if it is not cared for and managed properly. And, with the data from your Appendix B worksheet, you even have the dollar figures to quantify the importance of the computer system in terms that can be well understood by management: money.

All you need now is a foolproof means of communicating your information to management. To do this, you need to be able to adopt the management viewpoint, the investment viewpoint.

Most people understand investing. You put money into a savings account and a year later you can take that money out with a little extra added to it in the form of interest. That interest is the return on your investment. It is what comes back to you (returns) at the end of the investment cycle. This is perhaps the simplest way there is to make a profit. The only problem is that the profit is so small.

Most people understand that companies run on profits. When they make a profit they survive. When they don't, they don't. But few people realize that a company, any company, must make a very dramatic return on their investment to survive. Our stock market mentality has people thinking of companies as commodities that are bought and sold like pork bellies. This viewpoint is OK for capitalists, stock brokers and hostile takeover artists, but it is not the viewpoint of management. To management, a company is an income producing machine. Management has to make a company produce income. If they can do that well, they survive and earn bonuses. If they can't, they are replaced.

For you to communicate with management, you have to be able to adopt their viewpoint. Try it. What do you think management wants to hear from you about your proposed CPU upgrade? They want to know how much income it will produce, how much profit it will generate, how much return they will get on their $100,000 investment.

Now this is really important: Management is not anti-spending. They are not dead set against spending anything at all. Just look at how much your company spends every week; they spend virtually all that they make. The trick is not to avoid spending. The trick is to spend well.

Your job, from your hat as a staff member, is to communicate to management how your proposed $100,000 expenditure is in the best interests of the company because it will result in more than $100,000 in income. Of course, you also have to show that it will do so quickly.

How quickly? Very quickly.

With a savings account, you can put some money into the account one year and take it out the next, with interest. All during that year, your money is right there in the account, safe and sound and earning interest. You can get it back any time.

With a business, each week you spend your money. All of it, or very nearly. When you spend it, it's gone. It's not there any more. It's not sitting in a "safe" savings account where you can get it back. It has been spent on such things as rent, payroll (your pay, for example) and equipment (a CPU upgrade, for example).

So the money the company made that week is gone. Yet the company has to bring in more money the next week to be able to cover the next week's rent, payroll and equipment, and so on, week after week. Where does the next week's income come from? It comes from the paid staff using the purchased equipment in the rented space, who create products or services that are exchanged with customers for income.

Are you with me so far? If not, read over the previous few paragraphs until it is clear.

Here is the heart of managing a company: each week, the production of the staff and equipment has to produce enough to exchange for the income needed to pay the staff, buy the equipment and rent the space, plus a little extra. And it has to do so in time to make the next round of payments. Every week, the company is reinvesting virtually everything it has to raise the money to make it through another week. If your $100,000 expense will derail that plan, you won't get the money. If your $100,000 expense won't derail the plan but might erase all the profits, you probably won't get the money, either. But, if your $100,000 expense will bring in $100,000 in income, plus a tidy profit, your expense stands a very good chance of getting approved.

The worksheet in Appendix B shows you how to calculate the value of a defragmenter to your company. Collect up the data you need to fill out the worksheet, do the calculations, and then write a memo to accompany your purchase request. Lay out the memo in three sections:

First Section: The exact situation your purchase is intended to handle. The situation, in this case, is the horrid expense fragmentation is incurring for the company. (To you, it's a performance problem; to management, it's an expense. Get the idea?)

Second Section: All the data needed to demonstrate the truth of your assertions about this horrid expense, and to support your proposal that purchasing a defragmenter will resolve the whole matter and pay for itself and bring in a tidy profit to boot. Hint: If the data is lengthy, put it in attachments, keeping the cover memo to one or two pages.

Third Section: The solution, which should be entirely self-evident at this point, which is to approve your purchase.

Do this, and you will get your truly needful purchases approved every time.

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