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Ask Slashdot: IT Spending In Engineering? 146

Posted by timothy
from the what-you-need-is-a-bean-counter-flinger dept.
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?"
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Ask Slashdot: IT Spending In Engineering?

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  • Welcome to reality (Score:5, Insightful)

    by Black Parrot (19622) on Sunday June 30, 2013 @11:36AM (#44147533)

    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.

    • by dubbreak (623656) on Sunday June 30, 2013 @11:45AM (#44147571)
      This. New director says you spend too much. He most likely has nothing to back it up and doesn't care if anyone has facts or figures to back it up. It's a top down decision that you won't have any ability to change in any way shape or form. I'd suggest polishing up your resume.

      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: (Score:2, Interesting)

        Exactly. These MBA morons are like the proverbial Railway exec who calculated that all the rolling stock of the company occupies just 10 miles. He declared all the remaining miles of track to be excess inventory and sold them for scrap. But sadly, he would have collected his bonus and would wrecking some other company by the time this company realizes what has been done to it.
        • by umghhh (965931)
          This is either funny or terrifying - I am not sure. There was once this fashion in management called down-sizing. I saw a bbc documentary about it (I am sure there was internet at the time but with mozaic as a browser - it was that far back in time) An example of that was Amtrack. I do not remember the details but what they claimed was that the costs reductions succeeded for few years with the result that at some point Amtract started having problems with drivers and locomotives. Sadly the reality of big or
          • by greenbird (859670) on Sunday June 30, 2013 @07:16PM (#44149471)

            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.

            • I find your combination of hate of MBA's and your Ayn Rand signature hilarious on a deep and cosmic level. Thank you.

      • by Grishnakh (216268) on Sunday June 30, 2013 @04:39PM (#44148933)

        I'd suggest polishing up your resume.

        Totally agreed about the rest of your post, and I think this line is the most important part of all. This company is doomed.

      • by c0lo (1497653)

        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).

        It is very likely the talent that you mention should be quoted (as "talent"): an explanation here [brucefwebster.com] (the most mobile talent - the one it's likely you would want to have - will evaporate earlier).

      • by PanAmaX (1102857)
        dubbreak nailed it here.
        I've been in a similar company in the past and seen this happen first hand. The short term gain is what they get rewarded for, they move up the company while riding on their high before the effects of their poor decision making is felt and then transfer to another company on an even higher position and proceed to make the same poor calls.

        The second paragraph is where the truth of the matter lies. The money men drive the company even though the R&D is the engine room, with th
    • by Anonymous Coward on Sunday June 30, 2013 @11:58AM (#44147643)

      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.

      • by gweihir (88907) on Sunday June 30, 2013 @12:26PM (#44147777)

        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.

        • Re: (Score:3, Insightful)

          by Anonymous Coward

          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 sta

          • That's the real problem. The intense focus on meeting and/or exceeding the "numbers" for the current quarter. Particularly with the "numbers" being decided by a group of people with little actual knowledge of the business.

          • Re: (Score:1, Interesting)

            by Anonymous Coward

            I once worked for VMware

            Our team from Burlington found the largest number of bugs -- part of our educational background and abilities.

            Management on the VP level got annoyed.

            Instead of bringing up the people in other centers to our level they decimated the most talentented people who exposed the bugs. They downloaded the abilities of this centre to all those that existed worldwide -- i.e. poeple who work on kernel failure no longer know how to program thus cannot identify bugs. It seems the staff in Bangalor

          • ... security has no ROI ...

            This is why traditional security companies with guards and trucks don't get into IT sec. IT sec lets you build locks which last forever while traditional locks only need to last as long as the patrol interval. The management of the traditionals don't have the left-hemisphere intelligence to learn IT.

    • by ka8zrt (1380339) on Sunday June 30, 2013 @02:11PM (#44148281)

      Four words (which should be printed in blold letters, etc.) come to mind about similar situations
      - CompuServe
      - Lucent Bell Labs

      While these were not IT spending per-say, in both cases, upper level management had their own inept vision of reality and agendas. The lower levels tried to get management to understand, management refused to listen, and the rest as they say is history. Sadly, folks at the upper levels of both of these were not entirely a bunch of idiots with sales, marketing, MBA or accounting folks. In the case of CompuServe, we were clearly tech heavy all the way to the top at the time. We just had management who had their own vision/plans, and could not be convinced of the fact that was was being done was wrong. In the other case, I don't remember how many of the upper level folks came from the more technical backgrounds, and how many were from backgrounds which were more in tune with the typical "business suit" mentality. But communications became more unidirectional, incorrect decisions were made, and these companies were gobbled up while many tech folks either left between the mind set in the work environment, or were later tossed overboard in management's attempts to lighten the load to keep from sinking (you don't throw those who are working on bailing out the ship overboard while you are sinking and expect to not sink).

      At this point, the best course of action is to attempt to work your way up the ladder, convincing them with how your IT costs relate directly to making your company money. You don't say what sort of engineering firm, but tying those costs to directly to modeling stress/loads in an architecture engineering firm, the SQA of a software firm, etc... and then looking at options such continuing to use 3yr old (or what ever the figure is) computational systems, and tying the costs of doing so to what your firm does, listing all the pros/cons, and then presenting it up the ladder while addressing the issues raised at each level... While it does not guarantee success, but this is the way you win a battle like this. Lots of details, hard numbers, pros/cons, and facts. Periodically, each of you will be faced with making your own personal evaluations of stay/leave, but such is life. If you are lucky, you will either make it through the storm, or have a way off the ship which keeps you from swimming unexpectedly. If not, you just hope you can swim to shore or to be able to catch hold of a rope dangling off another ship. But regardless, such is life... not all ships can avoid the heavy weather, and you just hope that the ones you are on do not go down with you stuck onboard (and that those at the wheel are smart enough to take the advice of folks like you when you spot a storm off in the distance, or notice that the wind is coming at you from the wrong direction).

      Good luck and may you never be faced with being on a ship where the captain refuses to point the bow off course as required by the weather you are in, and instead only listens to a navigator who continues to point you towards your next port (or worse, having to report through said navigator).

  • Presentation (Score:5, Insightful)

    by denmarkw00t (892627) on Sunday June 30, 2013 @11:40AM (#44147539) Homepage Journal

    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.

    • by thorndt (814642)
      Wish I had mod points right now. I would rate this Insightful and Informative. Exactly the right thing to do.
    • Also (Score:5, Interesting)

      by Sycraft-fu (314770) on Sunday June 30, 2013 @12:02PM (#44147675)

      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.

      We may have to do just that where I work. The Dean has been fiddling with the budget again (he's really, really bad at budgeting) and has approved about 33% of our capital budget. He says he'll see if there's more money once the FY starts. Well if not, we are just going to have to make it clear what they don't get to have. Toner will be a big one, we spend almost a third of the budget on that because every professor just HAS to have their own personal printer (this isn't something we get to say no to). Well, those purchases will have to stop, departmental toner purchases only, and then only for academics and business needs. We'll identify the computer labs that are running Windows XP that cannot be upgraded to 7/8 that will need to be shut down next year when updates stop. There will be no new purchases of desktops for anyone unless their computer is just non-functional, no refresh. Etc, etc.

      At that point, he'll likely decide that more budget is needed, and move money around (I haven't looked, but my suspicion is he's giving the advertising group more they are a black hole that always wants more). If not, we'll keep going on what we have, and services will be cut because there won't be the funds for it.

      It can be very effective to not only show people what you give them, but what you won't be able to give them. A 50% cut is huge, that isn't the kind of thing where you "just make do with a little less" or "cut some minor things" that is where major services have to be cut out. Show him what those are. It is easy to say "I want a 50% cut," when you just look at the money side. When you see what you are going to lose, then it is not so easy.

      • Oh God! No! (Score:2, Insightful)

        by Anonymous Coward

        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

        • by c0lo (1497653)

          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.

          If he's smart, in the mind of the boss the thought is likely to go on the line of: "Thanks sucker for telling me how much time I have to cash my bonus".

      • The Dean has been fiddling with the budget again (he's really, really bad at budgeting) and has approved about 33% of our capital budget. He says he'll see if there's more money once the FY starts. Well if not, we are just going to have to make it clear what they don't get to have. Toner will be a big one, we spend almost a third of the budget ...

        1) Why why WHY is toner part of a *capital* budget? That is like putting pencils in a capital budget. It's a basic office supply. Move it out of the capital budget, in the next budget cycle if you can't do it before. Because it's in capital, people will be much more inclined to believe that they can cut it or delay the expenditure, and it will be measured against the capital improvements (Rather than supplies) of other departments, and it will get more scrutiny.

        2) If you haven't already, it's obviously

        • by Sycraft-fu (314770) on Sunday June 30, 2013 @12:56PM (#44147929)

          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.

          • by ka8zrt (1380339)

            Not just that... different companies/universities work differently from others. For some universities, things like toner for those printers, servers, etc would come out at departmental/college level, with no real traceback to who is using what. If the prince professor of the department wants five servers and you are forced to take them out of your budget, server pool, etc. instead him or his team having to budget for them, chances are your boss is going to drop the pain on your shoulders as opposed to lea

          • by bmcage (785177)

            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.

            What nice view you have of us. We print on our own printer because:

            1) the big printer is busy again printing some courses and you need it now

            2) it's confidential

            3) the big printer is too far or needs a special code against your department

            Moreover, if you don't give them their printer or cartridge, it's not as if they don't have the budget to buy it on own costs. If your Dean cuts costs, just tell everyone the personal printer is on own expenses, many unis work like that. Uni's are not like companies

            • What nice view you have of us. We print on our own printer because: 1) the big printer is busy again printing some courses and you need it now 2) it's confidential 3) the big printer is too far or needs a special code against your department

              1) If the big printer is frequently busy with big jobs, then there should be a printer specifically for those big jobs. Also, with modern printing software, the print can be piched up at any printer (badge printing), so if one printer is busy, find another one.

              2) Not a problem. Lots of solutions exist, and all printers I know of will let you specify a PIN which needs to be entered at the printer to get the print out (default setting at our company)

              3) If it needs a special code against the department, th

              • by bmcage (785177)
                Problem with 2 and 3 is that you need to walk there and wait. To move a print job from a printer to another one would often also have the same problem.

                The wage cost is quite high here, and people are busy, busy, busy. Walking and waiting is not high on the list of things to do.

          • by Anonymous Coward

            You appear to be alluding to the University of California. If so,

            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.

            is not remotely true. That decision is made at the campus level with respect to internal accounting controls. Consumable materials and operating expenses are two additional budget lines available, and cost transfers through internal recharge are more than possible for departmental special requests. Your hands may be tied, but you should look to your AVC/Chancellor for the reason why, not the state, UCOP, or the Regents.

      • by spotvt01 (626574)
        Good discussion, but you might be forgetting something ... productivity and long term impacts. What will the long term costs be of not doing a tech refresh? How are the departments likely to respond (e.g. buy their own computers) and what are the costs to the institution? Inaction will inevitably have a cost.
    • You may also want to show what alternatives cost, along with pros/cons. For instance, if you use Amazon cloud services, show what the costs would be to switch to two of Amazon's competitors and any performance improvements/losses that would occur. You'll either be able to show that Amazon is the best bang for the buck, or you'll find part of the savings you need.
    • Re:Presentation (Score:4, Insightful)

      by magarity (164372) on Sunday June 30, 2013 @12:19PM (#44147743)

      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.

    • Not being cynical here (I agree in general) but from experience I would add that for those in *highly active and dynamic R&D IT environments* the time, effort, cost, and personal stress of presenting that data to a new boss makes it almost impossible without bringing in a workflow analyst, usually leading to a conclusion a year later that hopefully vindicates your first assurances to the new guy, or at least allows both of you to see where any issues might exist that require tuning. If that analyst can

    • by Anonymous Coward

      Step #1: Polish up your resume.
      Step #2: Ask around about other jobs.
      Step #3: Abandon ship before the cost cutting kills your company.
      Step #4: Say you'll cut IT expenses by removing the job of director of IT, as management knows how to do it better.
      Step #5: Offer to work as a consultant, part time, if desired, for your current salary X4, if needed, so they won't be left in the lurch.

    • by Ice Tiger (10883)

      As someone who is doing this activity right now I 100% agree. These days you have to know your IT costs as if you were running it as your own business. For our activity our starting point was if the company was starting tomorrow, how would we do things and working back from there.

      This also helps with the IT shop changing the mentality of having to provision all the IT instead of say cloud services for commodity services etc. As the OP said, phrasing IT spend in terms of commercial outcome will help with you

  • by anegg (1390659) on Sunday June 30, 2013 @11:48AM (#44147597)

    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.

    • by petes_PoV (912422) on Sunday June 30, 2013 @12:39PM (#44147851)
      The new guy's just messing with them.

      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.

      • I would mod you up (except for the stupid mod system that means I never have mod points when I want to mod).

        Sadly this is "business" 21st century style ~ 50% politics, 10% luck, 10% corruption, 30% actual work. Many failing companies could be turned around in short order by removing the top heavy bonus culture for a more equitable system (e.g. look at Germany for a viable model) with all the long term benefits that brings but in cultures where next quarters earnings report matters more than whether the comp

  • by gl4ss (559668) on Sunday June 30, 2013 @11:50AM (#44147603) Homepage Journal

    seriously, just start labeling your clusters and CAD sw purchases and such as plain engineering costs and not IT.

    start only counting the generic information technology expenses as IT - email and word processing...
    the percentages don't really compare between companies that well - if you were to compare against a firm that doesn't need clusters for engineering calculations for example...

    of course the "right" thing to do would be to get the director to magically understand that you have plenty of engineering costs bundled up with the it budget.

    • by Anonymous Coward

      seriously, just start labeling your clusters and CAD sw purchases and such as plain engineering costs and not IT.

      start only counting the generic information technology expenses as IT - email and word processing...
      the percentages don't really compare between companies that well - if you were to compare against a firm that doesn't need clusters for engineering calculations for example...

      of course the "right" thing to do would be to get the director to magically understand that you have plenty of engineering costs bundled up with the it budget.

      ++

      And there's nothing dishonest about this, it's just how consolidated IT works, we pay for things if the whole company uses it or not.

      Get folks from accounting involved to see if there are better ways to attribute costs.

      Otherwise a compute cluster looks like a mighty fine place to start chopping because it's coming from the wrong budget.

    • This was my first thought as well. I'm surprised clusters and software goes under IT costs rather than engineering cost. MATLAB/Mathematica/SolidWorks are not an IT solution rather an engineering cost.
  • Make a strong business case to support the budget levels you actually need. It may be that 10% or even 20% reduction isn't a bad idea. If you can't support your "needs" with a business case, you don't need it.

  • As much as I would never want to see any of those presentation slides or spreadsheets with all the reasons why you are doing as well as can be expected, I would still expect you to be able to put such things together in some sort of reasonable business argument. But I suspect that it's not your 'gut' telling you that everything is fine, that's ignorance. I certainly understand the perils upper management meddling in affairs of which they know nothing, but I also understand middle management resting on the

  • by gweihir (88907) on Sunday June 30, 2013 @12:17PM (#44147737)

    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.

  • If you are spending most of your budget on the insane precious metals support contracts then you are wasting money

    If you are always sprawling out new hardware for every new requirement then you are wasting money

    For lots of organizations it's easy to cut costs and get more for your money

  • 50% sounds like [s]he either pulled it out of their ass or like someone else mentioned - the financial situation is dire. Like most discussions, you want to frame the conversation in the best possible way for you to win it. In your case, I would work with your boss to re-frame the discussion around cutting the right part 50%. Moving all engineering related expenses to line of business accounts would be a good first step, then you can take a look at the real enterprise IT. Of what remains, consider what
  • However, it may be possible to cut costs by 50% if you have some expensive bad practises.

    Let me give you an example. We replaced our old Dell Workstations - these were £2500 each, with newer, better units (Dell T3600s) for around £1100 a unit. There. In a single phase we cut more than 50% and the new units are not in any way a step backwards. IT costs can/do fall over time, so I'd argue initially that taking a good look may not be as hurtful as initially it seems. Virtualisation and cloud are of

  • What strategy would you use

    I would move some of the IT related spend into a different budgetary category.

    I expect from your question that you are one of the junior members of the organisation. The management will already have made plans for some token cuts to non-essential areas (though that could still include you) and found ways to preserve their empires, and maybe even surreptitiously carve out a little more besides, with financial shenannigans - that's their job.

    You new director doesn't actually want any reductions in overall s

  • by plopez (54068) on Sunday June 30, 2013 @12:37PM (#44147829) Journal

    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.

    • by PPH (736903)

      How did this manager get to this 50% number?

      Sounds like something he pulled from a consulting firm white paper.

      We have a new director....

      If he's willing to learn your processes and identify specific places where overspending occurs, I'd say keep him. Otherwise it sounds like one of these people who swoop in, wring their hands over budgets, bring in the consulting firm and go on to the next job (or go to work for the consultants themselves) before implementation/restructuring is done.

      Don't knock it though. Being a traveling rainmaker for consulting firms can be a lucrative ca

      • Sounds like something he pulled from a consulting firm white paper.

        Or some place that makes contact with white paper several times per day...

  • 8% may be low, just right or high depending on what else is in your "engineering budget". The 50% number is management BS. A number pulled out of someone's arse that is completely meaningless. You could just as easily spend more on engineering salary and grow the "engineering budget" to the magical 4% spending target as slash costs to the point you are out of business. Let me suggest the better approach to your manager. Look at where you are spending money, evaluate alternatives and if you see something off
  • The first mistake you're making is trying to compare yourself with other engineering firms, which could easily be the same mistake your new IT director is determining your budget. You're asking 'how much do other engineering firms spend' when he could be thinking, "this is more than what my previous engineering firms have spent."

    That and 'engineering' is far too broad a term to outright compare as some companies require hundreds of licenses for fluid dynamics modelling software at $10's of thousands of
    • by urbanriot (924981)
      I'd also like to add that it would be a good idea to play devil's advocate with the information you find so you can present to your new IT director with some choices to show that you play ball and also, to determine if there's some legitimacy to what he's saying. Or perhaps you may truly find that there are some areas where money can be saved.
  • This almost certainly came from some sort of "how much do you spend on IT" survey. Split your normal IT spending from your Engineering hardware budget. Then compared to other industries, your IT is in line.

  • by Anonymous Coward

    You know when you have cut IT spending too much. Its all pretty practical. When the cheap server crashes so regularly that its impractical to use, you know you spent too little. When you can't get staff in to fix cheap hardware because of overtime limits (or no overtime), and systems 'stay down' till late in the next business day, then you know your IT payroll budgets are too low. When you lose a significant of your revenue in a year because of data loss, you know IT has been cut too deeply. People sug

  • First of all, an organization where almost 50% of the staff (900 out of 2,000) is engineering sounds cool -- even most "technology" companies are much lower than that. When you consider marketing, sales, admin, HR, upper management, support, etc. it's easy to see why. But that's beside the point.

    As others have said (and I'm saying this both as a guy whose been pitched to, and been doing the pitch), in a healthy organization, it just comes down to numbers (dollars, man hours, etc.) When I've been t

  • You didn't mention software licenses. CAD software, modeling software, computing platforms can cost thousands of dollars per seat per year. Stuff like Solidworks or Pro/E or MATLAB are incredibly expensive, I can't imagine that it's stuff like hardware that costs the most. And companies probably ARE spending too much on software. They'd be far better served by having, say, industry organizations commission high-quality software (perhaps open-source) instead of paying the annual Solidworks or Pro/E tax. Unfo

    • If you think you can replace pr software like Solidworks or Pro/E or MATLAB by getting "industry organizations commission high-quality software" cheaply you obviously have no idea what is involved.

      My first job was at just such a place for CFD you think will be cheap - we spent the cost of a small house on a single bit of HP instrumentation gear (this is before they sucked)
  • It's clearly trivial to cut IT costs by 90%, while only increasing other costs by only 7 or 8% -- reclassify IT costs not related to office work to the engineering budget. You'll have world-beating IT costs of only 0.8% of total engineering budget.
  • Well you can toss a box on the table marked 'employee tools' containing a calculator, a pad of paper and a box of pencils and then ask the 'boss' how much work he thinks the department will get done....
  • I try to make sure that all the equipment in our labs is designated as Test Equipment and not 'IT' stuff. Lots of modern test equipment incorporates computers, but the goober who installs the anti-virus suite is NOT getting near it. If you have the test equipment networked, keep it on a separate network from the 'IT' stuff and completely isolated from the Internet. Also prohibit non-tech people from having access on it.

    By partitioning your 'test equipment' away from IT, you can keep it out of the IT budg

  • You didn't mention engineering software licenses. Those can be ridiculously expensive.

    But if you are spending the bulk of 8% of your *engineering* budget on computing hardware, then yes, you probably are spending too much.

  • Most organizations spend about 4% of their gross in IT, so most probably the new director think that this division should also spend that much,
    and has little clue what an Ingeneering company really does.

    Now apparently the company is really spending a low less than 1% in "traditional IT", maybe some is hidden in other part of the organizations (things like payroll, accounting, big ugly SAP or Oracle Financials kind of stuff) and the real cost is really higher, or the IT staff has a harder time baboozeling en

  • We're a 1,700 employee regional government organization (analogeous to county). Engineering (paired with Construction) is one of our largest divisions, probably about 600 employees, with 200 of them being Engineers.

    As that aspect is pretty opaque, dealing with pipes and water and sewage treatment (even if the org itself is pretty under-the-radar), the engineers get pretty much what they want. Large Monitors, Top Spec computers every 18 months, latest versions of AutoCad and other CAD programs, dedicated IT

  • When we set our budget this year, we researched and found that the national average for IT budgets according to CIO.com and couple of other sources (all self reported, though) was 5.2% of the company gross. I would sit down with the corporate comptroller or CFO and find out where you should be. It sounds like most of your expenditures are directly related to product (and if the use any form of cost accounting internally) should be able to trace directly to your expenditures. Remember, if after the analysis

  • by raarts (5057)

    This.

    The mediocre intellect is running the world. And we are allowing them.

  • I'd get together with other managers (I assume you're one), and set up a budget discussion meeting. Then, I'd assume that he was expecting you to give a whatsitcalled, zero-based budget? where you start from zero, not from what you have. Perhaps a compare-and-contrast of zero-based and what you have now.

    Heh, and, of course, if you went more heavily into Linux, with low-to-nothing licensing per workstation.... Esp. since you say you're an engineering organization, as good or better tools all run on Linux.

  • Calmly explain that computers run on binary -- ones and zeros. Simply ask him, with the proposed 50% reduction, which should be axed, the ones or the zeros?
  • Just doubling the salaries will get you to 4-6 %.

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