By Stewart Deck
Network World, 12/24/01
Man, oh man, what a tough
year. Across corporations, network projects were trimmed or put on hold. IT
spending, although heavily budgeted, was often frozen.
On the plus side, network
executives have gained negotiating power against vendors over prices. But
even when IT budgets aren't squeezed, senior management now wants far more
justification for every dollar spent. The trend is once again zero-based budgeting,
where no project is approved - even the annual initiatives - until every dollar
is defended.
You need budget negotiation
strategies different from those used during the so-called New Economy - when
money gushed down on IT like a waterfall - because the next few quarters will
likely be a continued drought. Economic improvement isn't likely until well
into the first or second quarter of 2002, says John Gantz, IDC's chief research
officer. Although IDC predicts next year's IT budgets will grow, the purse
holders may not let you actually spend those bucks until the economy shows
signs of revival.
Loosening their grip requires
extra preparation on your part and then giving decision makers a reason to
say yes.
Numbers or emotions
More than ever, today's
budget negotiations require you to understand thoroughly how your CEO and
CFO think and what pressures they're under. Are they bottom-line-driven,
requiring solid return on investment right off the bat? Do they respond better
to a discussion including thoughtful and creative forecasting?
Bob Whyte, formerly the
CIO at DirecTV and now CIO at SAP Portals (a division of SAP AG), says speaking
the CEO's language is vital. "I could get ahead with one former CEO by
showing emotion and banging the table. With others, [budget success] was purely
a matter of how you presented and supported your numbers."
You can learn a lot about
preferences by asking successful division budgeters how they handled negotiations.
Likewise, premeeting conversations with your CEO and others can clue you in
on current CEO pressures.
The goal is to craft arguments
that clearly advance your CEO's existing agenda, says Robert Bordone, a
Harvard Law School lecturer and deputy director of the Harvard Negotiation
Research Project in Cambridge, Mass.
Is the board of directors
pressuring the CEO to slash costs, build new revenue streams or support new
growth? Once you know, you can decide how to slant your project, emphasizing
cost-cutting benefits of the VPN upgrade in one case or its accessibility
to smaller business partners in another.
IT may be a crucial hub
of many companies, but to the CFO and CEO, it's just one piece of the business.
It won't matter how vital you say a new network upgrade is unless they think
so, too.
"I focus directly on
the business and how [IT projects] will help people and cut costs" instead
of how cutting-edge the company can become through IT spending, an appropriate
tactic last year, says Kendra Bender, director of networks and IT at Tipper
Tie, a Cary, N.C., company that makes aluminum clips and wire machines for
the food-processing industry.
A year ago Bender sold
the idea of a new customer relationship management system "by showing how
we needed it to stay competitive. . . . Things are way tighter now,"
she adds, "so now I'm carefully comparing costs with returns. In tougher
times it's sometimes better to table some things and revisit them in six
months rather than push too hard."
Timing is critical, agrees
Frank Hood, vice president of IS at Krispy Kreme, the premium doughnut maker
based in Winston-Salem, N.C.
"In tough times, you
have to make some choices," Hood says. "Right now, I'll sell network
security with a greater degree of urgency than I would the need to switch
to a new network infrastructure."
Hood also gathers support
for his projects from other company divisions so his larger budget requests
carry additional weight and significance, and are therefore harder to turn
down.
Honey or vinegar
Some negotiators think
tough times require tough talk. But demanding or threatening is the wrong
approach to a harmonious compromise. "Good negotiators craft choices that
are good for the other side," Harvard's Bordone says.
He recalls that before
the September 1978 Camp David peace talks, negotiators asked Israel's Menachem
Begin to playact the role of Egypt's Anwar Sadat as part of an exercise.
By doing so, Begin realized that Sadat couldn't possibly accept Israel's
demands so he modified them to give the talks an opportunity to begin with
an initial level of agreement.
"Negotiation is about
persuading, not demanding," Bordone says. "Really good negotiators are
extremely good listeners who give choices that are easy to say yes to."
Deck is a freelance writer
in Arlington, Mass. He can be reached at sdeck@yahoo.com
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