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Advice Line | Bob Lewis » Budgeting when there aren't any budgets

October 31, 2006 | Comments: (0)

Budgeting when there aren't any budgets



Dear Bob ...

I just read your KJR column on budgeting ("Playing stupid games to win ... or at least to not lose," Keep the Joint Running, 10/23/2006) and you make some very valid points.  However, none of them will work for me because I don't have a budget.  My boss, the President and CEO, refuses to allow me to budget for anything.  As a result I spend money as I see fit and never know if I've exceeded his expectations until I get called on the carpet about something or other.

However, usually I am called on the carpet about the exact opposite:  Not spending money.  This may sound like an enviable position to be in, but let me tell you it is extremely nerve-wracking; trying to out-guess the user base and my boss.  For example, last week the plant manager at one of our remote manufacturing facilities called and said his PC was dying and when could I get him a new one.  Considering I'd have to order a PC and configure it, I told him two weeks.  He hit the roof and said he needed one right away, so I told him if could get one quicker, then go for it.  He went out and bought a $400 wonder at one of the big box stores and then proceeded to trash me to my boss.  I know this because yesterday my boss came in, while I was out at a doctor's appointment, and asked my co-worker (the other person in my department) if I really told the plant manager it would take two weeks to get him a new PC.  He also mentioned how much cheaper the plant manager was able to get a PC.

So, aside from the back-stabbing issues here, how can I budget when there are no budgets?

- Before budgeting

Dear Before ...

First of all ... two weeks? I know this problem up close and personal, having gone through it quite a few years ago. The solution is simple: Keep a few preconfigured, pre-burned-in spares in stock.

Here's how you budget without budgeting: Schedule monthly meetings with the CEO to review your updated 90-day plan for IT. You might be in a great situation, where you can turn the almost-always-nothing-but-lip-service point of budgeting into reality. Your budget is supposed to be the financial reflection of your plans, not just a stupid negotiating game. Not having to get a budget approved, you can make actual plans, let your CEO know what they are and what they will cost, and have real, productive discussions about what you're planning to do.

If you aren't in the habit of formulating a 90-day plan, the first one will take serious time and mental energy to prepare. Once you've done so, the time and energy you'll need to update it once per month isn't all that bad. And the discussion you'll have with the CEO based on the plan ... here's what I'd planned to do, here's what actually happened, here's what the next three months look like and here's what it will cost to make this happen ... establishes you as the kind of executive who knows how to make things happen in an organized, efficient, quick way.

If your CEO has no interest in having discussions like this, my best advice is to work like this and spend like this anyway, only without the monthly review meetings. If the CEO calls you on the carpet for excessive or insufficient spending, bring your plans with you to account for your actions. It's an opportunity to apologize for getting it wrong, and to ask for an hour each month to go over your plans so you can prevent a recurrence.

- Bob

Posted by Bob Lewis on October 31, 2006 04:34 AM


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Unbudgeted ..

I completely agree with the plant manager -- two weeks for a new PC! This was not one of the "your poor planning doesn't make it my emergency" situations. The plant manager PROPERLY interpreted your response as a lack of preparedness, a lack of concern for his operation, and an unwillingness to go the extra mile.

I suspect that the chastening you are getting is not for "not spending money", but for not getting things done.

Posted by: tomjedrz at October 31, 2006 08:18 AM

Two weeks is not all that unreasonable for office duty equipment. But where consumer quality (cheap multimedia box designed for home use not a company network) equipment will do, go for it. It takes me 3-4 days to get office duty systems from Dell or CDW when they are not backlogged, 5-7 when they are busy. Then it takes me another 2 days to remove the crap programs and install Co. authorized programs and configure for the network, as well as installing the corporate antivirus and antispyware programs. Most of the time you get what you pay for here.

Posted by: Joe E. at November 1, 2006 11:49 AM

Unbudgeted and tomjedrz,

I have to disagree with tomjedrz. Pre-configured spares would probably be just another excuse for the CEO to waste your time with a weekly "why are these sitting here unused?" discussion.

The plant manager is the one who needs to be called on the carpet here. Not calling at the first signs of trouble, not being aware that there was a lack of process control and budgeting for IT, and not realizing that the cheap-o $400 special will just eat up time and money that could be better spent on a true business machine, and then raising the roof and backstabbing to boot ... very unprofessional.

Very few seat-of-the-pants managers have the first clue of the business needs, much less IT needs. Your situation reminds me a lot of some time I spent consulting with a business owner who had adult-onset ADD. You had his attention for only as long as you were speaking to him. He never singed anything, never took any notes because "a handshake is king". When he would change plans mid-stream, his summary always was "it is what it is". Good for an hourly consultant, as change always costs money. Bad for a salaried employee who has to carom from one disaster to the next.

Posted by: Lowellt at November 1, 2006 12:08 PM

The comment "Not spending money..." is really telling. When I first started working in this industry I had the "Don't spend money disease". The job is not to avoid spending money. The job is like any other part of business: Maximize return.

If someone is sitting on there hands because of IT then the company is losing money at the rate that that person costs the company. A good rule of thumb is that an employee costs 3 times their salary. Spending money to insure that everyone can work is simply money sense.

Treat computers like toasters. If a toaster breaks you don't spend lots of time troubleshooting it and attempting repairs. You take it off the counter and put another in its place. A standardized desktop with canned images is a huge step in this direction.

Posted by: Wayne Colony at November 1, 2006 03:24 PM

Joe E. --
Two weeks for a PC is terrible in an urgent situation. In an urgent situation you pay extra for expediting and fast shipping, and work some OT to get it configured quickly. You missed the point .. the plant manager was justifiably angry because his problem was not treated with the appropriate urgentcy. His response was not ideal, but it was understandable.

Lowellt --
The plant manager is primarily responsible for keeping the plant running. Two weeks for the PC was not acceptable, so he went around the system. This is not an optimum solution, but neither is 2 weeks without a PC. I agree he should be talked to, but the IT guy should be as well.

Regarding spares -- if the CEO asks about the spares, a response of "so that we can replace failed equipment in 15 minutes instead of 3 days" should satisfy him. If it doesn't, lock the spares in a closet or file cabinet.

We are remiss in our duties if we are not prepared for these kinds of failures, because they are absolutely positively going to happen.

Posted by: tomjedrz at November 1, 2006 04:52 PM

I agree with Wayne Colony - sometimes we adapt a goal (not spending) that doesn't serve us as well as another - Maximize Return. Then remember, "It is easier to ask forgiveness than permission".

There is being chewed out and there is living with yourself (and the decisions you make). I have always chosen the course of action that allows me to live with myself...

Posted by: JonD at November 1, 2006 08:40 PM

I have worked for a former Mom and Pop Rather Pop and Son enterprise for a number of years and for IT spending I used to have to beg for needed items. the first thing I did was upgrade the 7 year old equipment. When the time came for a new CRM program (developed with an in house programmer I had to beg for) thsi time around I purchased machines as necessary, from desktops to servers and printing systems. I would let him know how much I saved. He stopped in my office and noticed the servers and was impressed that his company need such advanced equipment and complimented me. I have also kept spare loaded and ready to go, especially since one of the family members insists on tweaking their machine, as locked down as it can be with out limiting everything. (I actually set-up a machine out side the regular network fo his surfing).

Spares Rule for low stress, I rebuild the machine and it is the next spare.

Posted by: SteveM at November 3, 2006 12:41 PM

A couple of thoughts:

I live in a world where budgets are almost anything, and it's extremely rare that I need two weeks to get a new machine in place. If CDW etc. take too long, develop a relationship with someone local, who can get stuff to you in short order. Generally, when there is a delay it budgetary and process related - and the affected staff are informed of exactly what the hold up is.

As for the problem with the plant manager buying a cheapo piece of junk, I have to say it serves Before right, in my opinion. What did he think that guy was going to do?

Lastly the point about keeping spares is a good one. You don't even need to keep three or four. Even ONE spare would mitigate the problem, because if an order for a replacement was placed as soon as the spare was requisitioned, you would know that a new machine is already on its way even if another machine died on the spot.

In my opinion, the real problem is not that he needs to "outsmart" his user base, but that he's not thinking ahead, doing planning, being proactive or looking at ways to make technology a better tool for his users / employer.

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