Tech Manager—Spending Money

Last time, I spoke of the need to develop an annual budget to make your Strategic Plan a reality. I mentioned how most people outside of tech do not know the cost of technology initiatives. They mostly see consumer-level pricing on hardware and have no idea what a really good workstation might cost.

I stated that what I was writing about was not how to save money, but how to spend it. So now we have to discuss how you should spend your money.

A budget is a planning document. Just like the Strategic Plan, it maps out the direction you are taking with the money you have to spend. It should reflect the same initiatives your Strategic Plan has taken. So if your Strategic Plan is big on hardware spends, the budget should reflect that. If you are moving into new software arenas, the budget should lean that same way. When someone reads your budget, it should speak the same language as your Strategic Plan. It mirrors the same focus and targets—it just does it via a spreadsheet with numbers verses words.

A Spending Framework

A budget is not the final approval to spend the money. I have heard a lot of folks say… “We have the money, it’s in my budget”. I have been caught short when I have depended on the money being there. Every firm has different ways of managing the cash flow and funds that are earmarked for technology. Just because you have an approved budget does not mean that your firm has the money set aside in a bank vault just waiting for you to spend it. Your budget needs to follow the spending calendar your firm may have. If your firm is light on income at the first of the year, avoid putting major buys in front of them at that time. If they are cash fat in June/July, then set renewals and new purchases at that time.

Cash Flow Is King

When it comes time to spend the money you have gotten approval for, you need to go back and verify that the purchase can be made at this time. Be prepared for a negotiation on some items if they can be put off for a month or two. You should also give warning shots for big ticket items that are coming. Don’t surprise the finance folks. They have a lot of spending and know what is coming. They need to be prepped for large spends and the regular flow of tech renewals. When cash is tight, push off what you can. If it is critical, then make sure they know that. Others may be able to stave off spending if you are in dire need.

What About a Windfall?

Every once in a blue moon, you might get a windfall. This would be a time when funds flow easier than others. It might be a new project that is starting, opening a new branch office, or a savings that comes from better vendor discounts. When this happens, you need to know where your spending will go. Your Strategic Plan might contain some contingency items and your budget might also. I did mention that I add some small amount for R&D to my budget. But I also add several items that are not in the budget, but at the bottom called contingency funds. This would be part of the budgeting conversation, but you are not really asking them to approve that spending, just know that when/if there is an opportunity, this is where you will spend it. You need to be ready at the drop of a hat for spending when the opportunity presents itself. When someone says there might be some money to spend, then the first department that can claim it might get it. Be ready.

How to Create a Windfall

You will not often have someone coming to you asking how you can spend their money, so you need to look for opportunities to create a windfall. This would come at the points I mentioned above—a new project starting or a new office opening. When that happens, go talk to those who may need new hardware and software. Mention that this might be a good time to not only expand on areas needed, but to look to new ventures in technology and processes that might help the new project proceed. It might be a good time to rethink office layouts and workflow as you design the layout of the new space. Remember, these things should have been thought about prior to an opening coming along.

Moving the Money Around

I have a perspective, and it has been shared by those who have overseen my budgeting approvals, that the bottom line dollars are where we need to focus—not each line item. In other words, the total budget outlay needs to be managed, but not tied down to each line item. I have underspent and overspent on many individual line items, but the overall is what the firm is concerned about. If they need me to not spend as much as the budget outlined because of faltering fund flow, then they do not really tell me where to cut, just that I need to cut.

So throughout the year I may move money around by saving here to spend there. I may delay an initiative and push it into the next budget cycle if I need to spend in another area. The flip side of that is that I tend to spend the most important money up front. The items that I see as critical get the first funds. Near the end of the fiscal year, I may be called on to scrimp. I do not want to scrimp on the critical items. Critical items would be called that in your Strategic Plan. If there is a list of items in your plan, the most important are at the top. Spend there first.


So now that you have a Strategic Plan, budget, and know how to spend that money, go out and get it done. Review your strategic plan every three months and review the budget once a month and at any large spend. By doing these two things, your spending will be strategic, understood, and well executed. You can’t ask for more than that. Well… a few thousand more dollars would always help.

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