Hardware

Do More with Less: Stretching your PO limit to make large purchases

Circumvent purchase order limits


It’s a common problem: Somebody needs a piece of hardware or a new computer, and you know that going through purchasing or the CFO is going to be a nightmare for procedural reasons. Maybe your company requires sealed bidding for equipment purchases over a certain amount, or maybe you just have an IT manager who must authorize a purchase but has been too busy to even look at the request.

When you're facing such a situation, often the best way to handle it is to work with what you have and sometimes find creative ways of getting what you need. Let's review some real-world ideas to help you cut through some of the purchasing red tape.

Make big purchases smaller
Generally, the CFO, CIO, or IT manager controls the purse strings for larger IT purchases. However, other members of the IT team are usually allowed to make smaller purchases up to a certain amount in order to efficiently perform their jobs. For example, a support tech might be able to spend $200 for a new hard drive if one fails and is no longer under warranty.

However, a new computer costs around $1,500, assuming that you get Windows XP, Office XP Pro, and a decent monitor. This amount is likely to be beyond the purchasing authority for many IT staffers. Sometimes, getting this kind of equipment can be an exercise in frustration because of the hoops that you need to jump through. Is there an easier and faster way to make this purchase, while easing the frustration on you and getting users the equipment they need in a timely fashion?

Recognize the purchase order limit and use it
Assume that a particular IT person has a purchase order limit of $500. To get this $1,500 system, the person could issue three purchase orders—one for the monitor, one for the software, and one for the system. Without software and a monitor, decent sub-$500 systems are easy to find these days. If you need a system that costs more than $500, you can also consider getting a basic system and paying for things like additional RAM on a separate purchase order.

Charge it
Most companies will reimburse employees for the charges they incur while performing their jobs. If your company is like that, it is possible that the $1,500 system could be charged to a credit card for which the employee is reimbursed. Of course, before charging down this path, first make sure you will get reimbursed or you might end up getting burned.

Pool your resources
If you have a team of three people working together and you each have a $500 purchasing limit, it’s easy to get that $1,500 system. Simply pool purchasing resources and each of you buy a specific piece.

Break it up
Let’s face it, vendors want money and they might be willing to work with you to make it easier for you to hand it over to them. If you're in need of a piece of equipment, but have limited purchasing authority, you might be able to work out an arrangement with them to pay it off monthly rather than all at once. That way, you get your equipment, and they get their money.

Negotiation is key
If you're faced with a situation in which you need to get a piece of equipment but the price is slightly over your purchasing authority, try to negotiate with the vendor for a lower price. I’ve successfully done this a number of times in previous jobs. As long as the price reduction is reasonable, most vendors are more than willing to work with you.

Internal negotiation is important as well
While working with vendors to negotiate lower prices and using purchasing limits to their fullest potential are good skills to learn, if you find yourself in a situation where the only way that you can get equipment is to find creative ways to do so, it might be time to suggest a review of your purchasing policies. IT equipment isn’t cheap, and perhaps an increase in your purchasing authority or an easier way to make capital expenditures is needed. Of course, in many cases—especially with government—this isn’t possible because of the bidding requirements that are in place for larger purchases.

Get some authority
If you don’t currently have the authority to make any kind of purchase in the course of your work, try to get it. There are plenty of good reasons that most IT staff should be able to spend certain amounts, depending on the circumstances. Explain to your boss or the CFO that you can save him or her the hassle of constantly approving small purchases by just doing it yourself and providing them with a monthly report. Explain to them that you may be able to increase the efficiency of the help desk by not having to go to them for authorization to repair a user’s PC. The end result can be a little less work for them and a happier user in the long run.

Proceed with caution
If you have the authority to make purchases, don’t abuse it. The tips that I have listed here should not be used as ways to “get around the system.” Abusing authority is a surefire way to get it revoked. Also, use personal credit sparingly because you will be on the hook should your company refuse to reimburse you.

Have you argued successfully for an increased PO limit?
Have you convinced your manager to raise your purchase order limit to accommodate your need to buy IT equipment? Tell us how you made the case that persuaded your manager. Send an e-mail or post to the discussion below.

 

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