Recently Jeff Dean, the CFO of Spiceworks and Paul Chiodo, IT Manager at Meramec Electrical Products ran a webinar “Speak Boss and Get Money for IT”. IT managers are often challenged in getting funding for IT projects and during the webinar they called out two ways to achieve funding:

1. Understand your CFO, and  
2. Become part of the budget.

Understanding your CFO

The key is understanding how your CFO thinks, what he/she thinks about, and translating the benefits of your IT needs into that language.

Your CFO is not the end-all, be-all. His personal opinions are important, but he reports to the CEO, the Board of Directors, shareholders, and investors, and your CFO is often more concerned about their impressions than his own. Also, if the company has debt, there may be financial constraints outside of the control of the CFO.

Your CFO thinks in terms of specific metrics: revenues, operating expenses, some measure of profit (ex. EBITDA), and cash on hand.

Describe the ROI or need for your IT project in terms of these metrics. Don’t convey the technical benefits of the company, but rather, convey the risk & rewards of the project in terms of the above metrics. That could mean what risks you will mitigate and what that means for revenue or operating expenses, or it could mean how you will increase productivity and what that means for revenues. Think how you can increase revenues, decrease costs, or reduce the budget. Talk about how it can move the business forward or eliminate a single point of failure. For example, if you want to buy a specific type of server, don’t tell him the number of files it can store or the mechanism in which it will run faster, but tell him that it will run 20% faster and save x hours per week of labor and maintenance.

Becoming Part of the Budget

Every year, the CFO needs to come up with the budget/plan for the year. You need to become part of the process, so that it is easier to get what you want when the time comes.

Learn what type of budget your company uses. There are various types of budgets:

  • simple or ad hoc budgets
  • program or project specific budgets
  • standard annual incremental budgets based on the budget from last year
  • zero-dollar budgets where each year a brand new budget is formed

The type of company you are in and its financial health is telling of the flexibility around budgets. For less flexible budgets, focus on risks and reducing costs, and for more flexible budgets, talk about both rewards and risks.

  • Rapid growth companies (50-100% growth) require a flexible budget to serve as a guide for what the companies intends to spend money on. But in reality, not all expenditures are predictable for a company of high growth, so flexibility is key.
  • No growth companies has more predictable problems and therefore more rigid budgets.  Flexibility is limited and debt may be a constraints.
  • Declining companies will have almost no budget and no flexibility, and the CFO’s hands may be tied in such instances.

Consider what goes into the budget. Consider the hardware, software, implementation, ongoing support, staff needed for all of this, and other operating expenses and fixed costs.  There are capital expenditures which bring value over a long period of time and operating expenses which hit the budget right away.  Determine what it costs to run your department and how your project can fit in.

Check out the timelines of your budget. Are they annual or quarterly?  Is there a budget for the medium term (2-3 years) or the long term (3-5+ years)?  Determine when you should spend and when you should save.  If a company is expecting an increase in production, the CFO won’t want to spend on office servers when monies should be allocated for production expenses.

Once you understand all these aspects of the budget, step back and determine how you can fit into the process. The more involved in the planning you are, the more likely your project will be ok’d.

Have you faced this common challenge? What worked for you?