Ask Slashdot: IT Spending In Engineering? 146
An anonymous reader writes "I work in the engineering division at a large organization, about 2000 people total and about 900 in the engineering division. As I'm sure many institutions have been faced with recently, we are dealing with reduced budgets. We have a new director who has determined that the engineering division spends too much on 'IT' and has given us a goal of reducing IT spending by 50%. We currently spend about 8% of the total engineering budget on IT related purchases. About 10% of that (i.e. 0.8% of the total budget) is spent on what I consider traditional IT such as email, office automation software, etc.. The rest goes towards engineering related IT such as clusters for large computations, workstations for processing, better networks to handle the large data sets generated, data collection systems for testing facilities, etc.. My gut says that 8% is low compared to other engineering institutions. What do other engineering organizations spend on IT (traditional and engineering)? What strategy would you use to convince your management that 8% spending on IT is already very efficient?"
Welcome to reality (Score:5, Insightful)
Management exists to tell you what you need and how much you can have, not to ensure that you have what you really need to do your job efficiently.
Also, enforcing a budget cut will probably get someone promoted yet another level beyond his competence.
Presentation (Score:5, Insightful)
Put together a presentation to show your new director how you spend your monies - judging by your estimates, it's safe to say that you aren't quite sure how your department spends it's money. Put it in graphs, in a spreadsheet, make a chart, whatever you need to in order for your new director to understand where the budget goes. But, if you don't know yourself, you can't defend your stance. Itemize it and break it down, learn where all that $$$$ goes so you can prove that it goes somewhere worthwhile - if it doesn't, propose to cut it, and make changes where you can. You don't have to hit the 50% if you can convince him/her that 1) you aren't wasting money and 2) you can find places to help save money.
Like a good resume: don't just say what you do or how you do it, but explain why and how it helps the company. "We use these clusters for the larger computations" vs "We use these clusters for larger computations, which save us 30% on time and help boost productivity compared to when we didn't have them" yadda yadda.
Re:Welcome to reality (Score:5, Insightful)
My best guess is this is just the beginning. He'll gut R&D (to cut costs) ramp up sales on existing products/services to show some gains and make out with a nice bonus for him/herself. After a few years of no innovation and no new products the company will start falling behind the competition and either the company will collapse, or they'll suddenly try to "innovate" (i.e. play catch up after basically leveraging the company for some quick gains). That may or may not work, but either way the company will hemorrhage talent. Any talent left behind will be so stressed, bitter and tired that they won't be half as productive as they used to (they will have figuratively quit while they wait to find something better).
Re:Two questions (Score:2, Insightful)
Cutting the IT budget means one of two things - someone is looking for a promotion or the company is going bad.
In both cases it's time to look around for a new job.
Identify and present options for reducing budget (Score:5, Insightful)
I think I good approach would be to identify and present options to management for reducing that 8% down to 4%. Done honestly, recommending eliminating waste and increasing productivity of higher-priority services, and recommending the elimination of lower priority services altogether, this will give management an understanding of the cost to the organization of reducing the IT budget as requested. It is then up to management to decide whether they want to proceed.
Approaches that involve trying to tell management that they are wrong, or stupid, or don't know what they are doing aren't likely to go over well with management unless you can identify some factor that management isn't considering (yet). Unless one is in management, its not one's job to make those decisions. It is one's job to provide information to management so that they can make informed decisions.
Re:Welcome to reality (Score:4, Insightful)
My experience over the last 15 as an engineer in various corporations -- MBA "idiots" (I use this term correctly) have a "cost cutting agenda" not to cut costs but to enhance their bonuses. Sad part is these cost costs go to their heads and makes me think there are alot of sociopaths in this grouping.
I worked in a few companies, and larger ones have larger idiots -- they moved to cut staff and replace them with unqualified staff overseas -- staff they had no control of or no way to vet them. Many of these people have lied about their qualifications & abilities.
What has happened is staff overseas say "yes" alot to management -- not what is needed to be heard and have spiraled such companies into the dirt.
What counts is the cost savings in the short term which results in great bonuses for the executive management -- by the time the truth be known what a failure these costs where -- they are on to another company doing the same damage -- problem is the "harvard business school mentality" that only short term profits count.
I believe that in 100-200 years -- the "harvard business school mentality" will be described as a bad idea especially with the fall of western civilizations.
Oh God! No! (Score:2, Insightful)
Show what you'd lose at a 50% cut. Show him the things that they want to have, that would go away if they cut that much. Often people fail to appreciate what a budget is spent on and if it gets explained what they'll have to trade off they'll be more accommodating.
You are giving the person tooooo much credit!
Look it - I've been there - HIS boss is telling him to cut costs and HIS bonus is riding on it. Got it?
HIS BONUS.
I'm gonna tell you right now what he'd say to you - "You need to work with less." with a look of he doesn't want to hear anything and if you don't like it, there's the door.
Yours,
-AC, MBA
The MBA plague at work (Score:4, Insightful)
The problem is that you need to convince them. If this person was competent, he would already know what the budget is spent on and that it is mostly not spent on traditional IT. You can try to make a cost inventory and show that. With luck this idiot will realize he is out of his depth with regard to the non-traditional spendings and that the traditional spendings are pretty low. If that does not work, I recommend finding an employer who dose not put cretins into directorial positions. Also remember that cutting necessary IT spendings (as this guy is about to do) will make working conditions a lot worse and people will start to leave, the best and brightest first. If that happens, the days of your company are numbered.
Re:Presentation (Score:4, Insightful)
Parent post is on the right track: there should be no such thing as a blanket "we must spend x% to keep up" but instead each expense should show "for $x on this expense, we gain $y to the bottom line." With this approach (provided y > x) then "we need to cut z%" goes away.
Re:Welcome to reality (Score:5, Insightful)
Indeed. I have seen this from the outside several times now. The problem with this mentality is that essential costs are hidden (loss of talent, loss of company expertise, loss of viable strategy, ... and that the sociopaths doing the damage are never held accountable for their crimes. Hence this goes on and on.
You might want to get out while you can (Score:4, Insightful)
How did this manager get to this 50% number? Was there a thorough end-to-end review with feedback and analysis from all stake holders? Or is this some half baked idea from reading vendors' web sites and intended to boost the new director's resume? You did not mention anything about a review so I suspect the latter.
You will never win this battle. I have never seen anyone win a battle like this. Bail out now and preserve your reputation. But before you go share your concerns with as many high level managers as you can.
Re:Identify and present options for reducing budge (Score:5, Insightful)
He has come into a new organisation and needs to find out who's who. He needs to identify the competent managers (AKA threats), the lazy ones, and the idiots. A good way to do that is to drop a problem on the organisation, then sit back and see how it plays out. It's more of an exercise in office dynamics than a budgetary cut.
What the OP needs to do is adopt a similar position. See which teams and departments come out of this change ahead of the game and which ones are the losers. Then make sure he nails his colours to the right mast and wait for the next step up the career ladder.
Re:Welcome to reality (Score:3, Insightful)
This.
The MBA droid way of thinking brings immediate returns -- why pay someone $100k/year when a H-1B doesn't count for payroll tax, lets offshore this group of coders because the offshore company gave us a good deal, security has no ROI, so lets give it lip service... we can always call a consulting firm in case of emergency. After these go in, things start looking very rosy for the next quarter -- fewer headcount, the PHBs gain points for being axemen, etc.
Then the pain starts settling in. Deadlines start falling behind because the H-1B doesn't have the in-the-foxhole experience the veteran coder did. The product gets released. Customers start threatening lawsuits due to bugs found in the offshored code, so large parts have to be redone from scratch with security in mind. The people who made the product work in the first place have left, gone into zombie mode (their morale is so shitty that they are only there because employers rather hire someone working than unemployed.)
Then some enterprising blackhat sends the company a notice that he has found 20-30 bugs with the product, each allowing a remote attacker full admin access, and he wants paid seven digits per bug or else he will be releasing the exploits and proof of concept scripts onto the usual sites. Bugs which could have been easily avoided by people familiar with the product and who would have not made a program architect decision to have a service run as LocalSystem all the time that does all the work.
Then the losses come in. The company now has to either cut more people or else face shareholder lawsuits because they can't make next quarter's numbers.
Guess what? The MBA who did all this shit has moved on. He got out of there while his reputation was rosy leaving the carnage for someone else to clean up.
Welcome to business, US style.
The ironic thing, the Chinese companies I have worked with don't have this problem. If they are about to go ga-ga over focusing on making the quarterly numbers happy, their government will step in and stop it, that they are there for the long haul.
Re:Toner? In a capital budget? (Score:5, Insightful)
At the university there are only two kinds of budgets: capital and personnel. We have money for salaries, and money for equipment. Those are the categories. You may disagree with their method for doing it, but it is set by the regents and the state and it not something we control. Basically our personnel budget isn't being reduced, in fact there are small state mandated raises coming. However the equipment budget has only been 33% approved.
Personally I don't think toner should be an IT item, it should be in the same category as office supplies which is a department budget the business managers have. However, it is in the IT budget and that is that. We don't control it.
In terms of printers we have little control over that. We aren't like most IT shops where we can tell people what it is. We have to do what they want, by and large. Were it up to me, people wouldn't have personal printers, they'd use the large floor combo copier/printers which have much cheaper consumables on account of being so large. However they don't do that because:
1) They are lazy.
2) They use their printers for non-work related uses. We can audit the departmental stuff, not so for the personal stuff.
You have to remember that universities operate rather differently from companies.
Re:Whiner (Score:4, Insightful)
Outsourcing: "We Cut Corners, So You Don't Have To!"
That's why management likes it - they can ink a deal, have some SLAs in there for a few critical things, and cut the budget overnight. Sure, the provider doesn't actually have interests that align with your organization's, and after a year or two - when you've had to pay them extra to do everything that your in-house people would have just done - it'll end up costing more per year, and maybe the firm is actually cutting corners in a way that would screw your business if something goes wrong. But senior management has deniability!
It's the same thing that leads clothing companies to contract with a supplier that contracts with dangerous factories in places like Bangladesh. A few steps removed, and it's not your fault that hundreds of people died in a fire or building collapse. How were you to know?
Re:Metrics? (Score:4, Insightful)
Not only that, they are not factually sound, because they typically ignore critical things and make the bean-counters think they understand what is going on, when they in fact have no clue. Understanding your business is not optional for a manager, it is mandatory. No available metric can replace it.But you have to have true understanding of the real word to see that, hence the MBAs cannot.
Re:Welcome to reality (Score:1, Insightful)
Starts out interesting, then gets into a racist rant...
Re:Welcome to reality (Score:5, Insightful)
Sadly the reality of big organisations is that cutting the slack is needed from time to time and usually this does not happen without brutal surgeon that just cuts and cuts and cuts. If patient is relatively healthy and has some luck the lean company can actually be better than before.
That would be great if they actually cut the slack. From an MBA's perspective R&D and IT are slack. There are no black numbers to directly offset the red numbers therefore it is slack and can be cut. Now the bloated inefficient sales department, they have lots of black numbers so no cutting there. They get bonuses. Sales people continue to to oversell and lie about what can be delivered and then blame IT and R&D for not delivering what they told the sales people couldn't be delivered. Again from an MBA's perspective this is a problem in IT and R&D. The sales were there so the sales department did their job and got huge bonuses. But IT and R&D failed so we cut their salaries and lay them off.
That's how it works when the bean counters are in charge.
That second half. (Score:3, Insightful)