Are you one of those CIOs who are beleaguered by the politics of getting your budget or purchases approved?
Budget approvals can either be simple or one of the most frustrating experiences in a CIO’s existence. It seems as if CIO has to justify everything.
The way to play this game – and yes, it is a game – is to start from the position of a profit center. Hey, we’ve all seen the ad on TV where the various VPs of the company are asked to get up from a conference table and give their seats to the CIO based on a rate of return of 170% – a CIO who indulged probably wrote the ad. The problem with the cost center model is you can only incur more costs but even less cost is not profit. The words “cost” create the wrong perception both for the CEO and CFO.
So step one is to change the perception. How do you get to be a profit center? Well, in some instances, it’s accounting magic. You have to be able to sell your services to internal departments. You will have to develop a real operation model, complete with development costs, project times, operating costs, burden rates and other supporting figures. Ask your CFO, and s/he will be more than delighted to load you up with these numbers and others such as ROI, capitalization, expense, depreciation, PV (present value of money), etc.
Presuming you can pull off this sleight of hand, you are now ready to use numbers that the CEO and CFO can understand – and get that vaunted seat at the main table. After all, you will be showing a rate of return on their investment. Much better than cost, or the word that it equates with -“expense.”
So, what are the politics of getting things approved? First, turn your customers into your supporters, lobbyists and electorate. Yes, it is an election. If they are not for you, they are against you – regardless of appearances. They have to lobby the CEO, or whoever signs the checks, to get their systems approved. Why should you be the one to put your anatomy on the line? You are not getting the benefits of the improved new system, but what you may get if you are a profit center is the project work, which in a sense keeps you in business.
By having the user, your customer, promote the system, it keeps you out of the line of fire and makes the user justify the need. How do you get him to do this? How do you motivate him? Some managers are enlightened enough to understand the benefits to their departments and themselves. Others will resist because they feel it may reduce the size of their staff, affect their bonus, etc. There is a saying in the consulting world “when the system goes in the people go out”.
From these unenlightened folk you will find resistance to anything new. You may have to do some analysis on their operations. Again, you have to gain their confidence and trust. If the main guy is the blocker, then use one of his subordinates who has his own ambitions, or whose life would become easier if the system were in. You also have to let him know that you want to understand his operations, challenges, and goals. Again let your “sponsor” do the presentation. Only if there is no other alternative should you do it. You will also have to develop an ROI for this project. And yes, it is a critical piece of the final presentation.
Too many IS people design systems without a clue about these three critical factors. This is precisely why there are “politics”. And if you fail to understand this fact you will make enemies in an organization. IS has historically done a quick analysis and then spent months building and delivering a system that does not work or meet the users needs. When IS starts to implement it there are all kinds of finger pointing and accusations, none of which gains the CIO points.
The weekly meeting with the users (your clients) is fundamental to understanding what the user wants once the system is designed. Keep this meeting going; it keeps the lines of communications open. After all, implementation schedules, etc. have to be developed. The meeting helps to avoid the political wars that start due to a lack of understanding that things have changed from their original criteria. Things always change and it is a wise analyst who understands this. Otherwise, you’ll find yourself back in finger pointing mode due to a lack of communication and participation on the part of the client or sponsor. It is their system, after all, and no one likes surprises – particularly ones when a system falls short of initial goals.
If you “build up” the requirement from the multiple resource requirements of the various projects that your customers want, and can show the allocation of whose dept is going to pay for it, you have directed your signing authority to the conclusion you want. Namely, you need it, not for your department, but to support the user organizations that need this resource to improve their productivity i.e. ROI
A closing observation on ROI – it can incorporate external assumptions on increased sales, competitive position, time to market as well as internal processes oriented savings. Just make sure you can substantiate your numbers. The excuse that the clients gave them to you will not hold up in front of a tough CEO. Get a second opinion wherever possible as a sanity check. Even a rough verification is better than none at all.
A side benefit from all this is as you are now supporting and championing the users’ cause – they just might start to appreciate you.
Mr. Vishney has held several senior level positions as Partner in a Consulting firm, CEO, VP Sales and Marketing, Consultant, and CIO. As the founder, chairman, and CEO of the globally recognized software company, AWARD Software Inc., Mr. Vishney was instrumental in offering the leading edge BIOS software in the PC industry, which runs on over 300 million personal computers today. You can contact him at rvishney@vcgconsult.com, or find out more about him, his company, products and services at http://www.vishney.com.
