Q:

Ways to convince management of a high cost

new here, greetings and such.  
My problem is relatively simple, but the situation is a tad odd.  Currently, I have just been hired on to improve (essentially fix) a server room for a health care dispatcher.  However, their server room is in shambles.  Everything works, but it's a matter of I don't know what is going to break first.  They have just recovered from a 10-day data loss from their SQL server (the main server that keeps everything they need for day-to-day operation).  The server is a custom built, running Windows '03 with SQL '05 and needs to be upgraded badly.  However, their back-up system is also a problem because they have everything essential on 4 tapes, one of which has failed already (the reason for the crash and missing those 10 days).  Everything I have priced out for a new SQL server as well as a disk back-up appliance from dell.  Both costs are over $10K and I know for the moment, I can only get away with getting one or the other.  
After all that background, my question to you folks is.  Which should I get first? A new server that controls the whole company, or a better back-up solution to ensure nothing is lost?  And also, how would I go about convincing management of buying one of these items.  I have a nice case prepared, ready to show how each of these are important to the operation.  I just feel a few more points that maybe I did not think of would help as well.

A:

The best way to convince management to spend money on IT expenses is to understand the relationship IT has to the business as a whole and how the IT department can best help the business thrive. Many business owners and managers see IT only as a cost center, often due to their lack of familiarity with the technology; likewise, many sysadmins view the business operations as providing a budget and a server rack, with no visibility into why the business needs IT.
Mark Burgess (the creator of cfengine) has some fascinating ideas about business-IT alignment, including:

If we ask how to align Business and IT, it makes sense to find the common ground. Science and Business are not all that different. Both do `uncertainty management'. A scientist tries to reduce possible misunderstanding to a minimum and document lasting principles for the future. Sysadmins and engineers try to bring that predictablity to users. Business-folk are trying to engineer predictable streams of revenue in a fickle environment. [...]
What will be the professional shape of system administrators to come? They will have to be increasingly in-tune with their organization's diverse goals. They will ask: what are the core promises of my organization, and what did I do to keep these promises today?

To relate this idea to your current situation, try to look at the issues you're dealing with from the perspective of the business as a whole. Instead of asking the management to give you $10k to purchase one or the other item, prepare a cost-benefits analysis of the things you want to purchase that hits on most of the following points:

What are the business problem(s) I'm trying to solve?

Make sure you communicate with management about their plans for the business; perhaps they're planning to enter a new market, which might require new software that's not compatible with the current server, which would completely change your analysis, etc.

What are the potential costs to the business of not solving these problems?

Try to be very clear about this point. Don't exaggerate ("the server will go down and everybody will DIE!!"), but don't undersell either; if the costs are severe, management needs to be able to take that into account.

What are the solutions I've considered, and the costs and benefits of each?

This does not need to be highly technical, but it will help persuade management that you've done your homework. Also, while preparing the list, you might find a solution you hadn't considered before.
Count your implementation and support time as a cost; outsourcing services (such as setting up Google Apps to handle email instead of using Exchange) may cost cash money, but the time you save by not micromanaging an Exchange server may have substantial business value.

Many admins make the mistake of seeing a problem solely in technical terms; for example, a system that is out of date needs to be upgraded because it's out of date (it may have poor performance, or be incompatible with the newest applications, etc.). While this may be best practice from a technical perspective, running a business is about balancing costs and benefits and managing risk. If the benefit to the business is, relatively, small, it may not be worth accruing the costs in licensing, testing, your time to implement the upgrade, and also the increased risk of something going wrong.
If you learn to develop and present proposals like this one, you'll find something interesting: you'll start seeing IT as a part of the business whole rather than an independent unit, and management will start becoming much more receptive to your requests when they realize you have that perspective. You'll learn to make what you ask for line up with what management wants to do anyway, and they'll make sure you get whatever resources you need.

A:

I work with doctors, and I know it's a hard sell, if they spend money on their business, it means they aren't bringing as much money into their bank. So lay down both of the options and itemize them for each. Give the pros and cons of each and explain why we need each one of them.
Let them know your thoughts on what you think is more important, then ask what they would like to spend their money on. If you want to play hard ball, do this with out the price, then after you have them agreeing on how much they need both, then show them the numbers.
Points you could focus on

Explain to them why the server crashed (you didn't include this in your question, but I'm guessing it's hardware since you want to replace it).
Explain why this server is so important. 
How much would it cost the company if they lost the server? More than $10k? 
You also mentioned healthcare, which requires having records for x number of years per HCFA. If they lost that they would also be open for a lawsuit, how much would that cost them?

The last two points also fold into having an effective backup plan. Replacing the servers is great, but if the new server gets a surge, or comes with a faulty disk and last nights backups just failed. You could, again, be out a full day of no data. How much money was just lost?

