The Politics Of Purchase Approval
By Rene Vishney
Contributing Writer

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.
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