Welcome to a new feature in the Support Republic. Our TechRepublic financial team will periodically field a question from working IT pros about the mysteries of making those budget sheets balance. To kick things off, we asked our own IT team to pose a question that has been puzzling them.
TechRepublic IT Team: I've been asked to defend my request for a new hire on our help desk. All I know is that we're getting killed over here and need help. But how do I quantify these needs?
The Budget Crunchers: Sometimes the most difficult cost justification analysis revolves around the human resource needs of the company. In the trenches, it is easy to identify a need; you simply know there is too much work! However, telling HR or your senior VP that you are “getting killed over here and need help” generally does not qualify as a satisfactory need analysis. As with any investment, your company seeks to maximize its return on the outlay of capital for employees. So you must justify your request by showing benefits that outweigh the costs associated with the headcount increase.
Ask our TechRepublic Budget Crunchers for pointers on making financial sense from all those IT expenditures. Due to volume of submissions, we may not be able to answer every question we receive, but we will review all the e-mails you send us and write about the questions that are asked most frequently.
You can easily estimate the cost of your new hire by looking at the required salary, benefits, and equipment needs for such a position. To identify a financial benefit, however, you must dig deeper. You must answer two key questions:
- Will revenue be enhanced?
- Will costs decrease?
The answers are not always obvious. For example, if your help desk supports a sales force in the field, perhaps the lack of adequate staff is hampering the sales efforts. If 10 salespeople lose $500 per week in business due to IT issues, this position could add $260,000 in annual revenue (10 people X $500 X 52 weeks). If this is the case, your sales director will be more than happy to support your request.
Or maybe sales transactions are not being processed quickly or efficiently by customer service due to computer downtime. You can calculate lost revenue from the ill will created with frustrated customers who turn to competitors for better service.
But what if you cannot show a direct link to revenue? Now you need to prove a reduction in costs associated with your new hire (at least enough to cover the cost of the position itself). There are several avenues for achieving this cost justification. Perhaps your company has been relying on outside support lines or contractors to field service calls. Maybe your other help desk employees are paid overtime to take up the slack. You may even be able to show that the lack of help desk support is causing company employees to work overtime as well, relying on manual processes to complete their tasks. All of these costs can be tallied to show the savings associated with the new position.
My advice would be to go to your internal customers and determine the consequences of help desk failure in their areas. If it is as bad as you say, they are feeling the pinch as well. Leverage their anxiety to add credence to your request. If the company is losing money because the support is not there, you should be able to show a net benefit from the new position. Create a simple spreadsheet to communicate your views.
Cost of new position ($60,000)
Increased revenue due to enhanced sales support ($260,000)
Overtime savings from current help desk ($31,200)
($40/hr X 5 hrs/week X 3 people X 52 weeks)
Net Benefit $231,200
It helps to have supporting documentation from others within the organization to back up your calculations. You want to be prepared to answer questions from skeptics who may not understand how you arrived at your numbers. However, if you present a positive impact to the bottom line, you should be able to convince everyone that your staffing request is justified.
If you'd like to share your opinion, please post a comment at the bottom of this page or send the editor an e-mail.