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.
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).
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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.
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I find your combination of hate of MBA's and your Ayn Rand signature hilarious on a deep and cosmic level. Thank you.
Re:Welcome to reality (Score:5, Informative)
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.
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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).
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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
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.
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.
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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
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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.
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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
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Starts out interesting, then gets into a racist rant...
That second half. (Score:3, Insightful)
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... 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.
Re:Welcome to reality (Score:5, Informative)
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).
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It's a minor mis-spelling of 'per se', you ignorant gibbon. Anyone with half a brain knows exactly what he's trying to say.
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It's not a minor misspelling at all. It has 50% more letters and two out of three are wrong.
You're the worst kind of thick, the kind that don't know how thick they are.
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I think they could reduce IT spending even more.
From my detailed analysis of his company I can say that they should reduce IT spending to 10.
10 what, you ask? Just 10.
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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.
Re:Two questions (Score:5, Interesting)
Cutting the IT budget means one of two things - someone is looking for a promotion or the company is going bad.
Not necessarily. Even quite healthy companies are obsessed with cost cutting these days. The problem is, some management folks can't see that some costs are buying something of extreme value to the company. And they are cutting long term value for short term cost reduction
In both cases it's time to look around for a new job.
I take a different approach. Whenever I get higher level management who are out of their waters and inept at the helm, I just batten down the hatches and weather out the storm. They will soon be replaced. This method has never failed me, and I've been at my company for a long time. I've seen good executive move up . . . and bad ones getting the boot.
A younger colleague was asking me about an executive's plan of growth until 2015. The colleague was concerned that we could not reach this goal. I told him that the executive won't be around in 2015 anyway, and not to worry about it.
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That is a description of a company going bad. FYI, the result you have had to how you approach this issue is pure luck IMHO. The only places this works (and even then it is not failsafe) are in really huge companies that have a lot of inertia. But even they die if this type of behaviour keeps up.
Re:Two questions (Score:5, Interesting)
I wouldn't leave anything up to luck. It's all calculated long term strategy. And it has worked for 28 years in the same company. Although, I have moved somewhere else in the company, when I decided that one area was doomed.
In a big, healthy company, it is inevitable that you will get "infected" with a bad manager somewhere, sometime. I see it like a body catching a cold. Instead of "inertia", I like to think of a company as having a "immune system" to combat colds. If the immune system is strong enough, it will be able to get rid of the "cold", the bad manager.
However, if the top level of management all gets the Ebola virus, the whole company is going to bleed to death with them. I won't stay around if that happens.
Come back in two years, and ask me if I am still working for the same company . . . and, more importantly, if I have the same middle management, or if I am in a different are of the company. I'm curious myself about that answer!
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In a big, healthy company, it is inevitable that you will get "infected" with a bad manager somewhere, sometime. I see it like a body catching a cold. Instead of "inertia", I like to think of a company as having a "immune system" to combat colds. If the immune system is strong enough, it will be able to get rid of the "cold", the bad manager.
I'm going to guess that he died from analogy....
(Read it aloud. You'll get it....)
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.
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Also (Score:5, Interesting)
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)
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
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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".
Toner? In a capital budget? (Score:2)
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
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.
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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
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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
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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
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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.
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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.
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Alternatives (Score:2)
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.
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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
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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.
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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
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Indeed, with just a few waves of the magic open source wand, money is saved, servers / software is transitioned, and nothing of importance is lost.
Allow me: "Hey...Bob, we've switched everyone over to that new email server you guys put together, but the guys in Sales / Marketing are complaining that Outlook won't sync properly with it." "Well Dave, that's because it doesn't support MS's proprietary extensions, etc. But they can use Thunderbird, which duplicates much of that functionality." "So, it doesn't w
Your example is bullshit (Score:2)
Your example was probably obsolete thirteen years ago. Please discuss things seriously instead of just throwing up rubbish.
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There are things where no good metrics exist. This seems to be one of them. In fact, most "metrics" used in business today do not deserve the name, they are so bad.
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.
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Indeed. Why these criminally incompetent economy-wreckers do not end up in jail with their personal assets seized to pay at least for some of the damage is beyond me. Terrorism is peanuts in comparison.
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Apparently, it is also a very old problem. Just found this:
"A good decision is based on knowledge and not on numbers." - Plato
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Indeed. "Reduce 50%" doesn't give much information, more of a general guideline, unless someone likes magic; and it also speaks of someone who is issuing orders with zero knowledge of the damage they will cause. A smarter approach would have been "Could you review our current contracts with vendors, and see if we couldn't renegotiate some of them, or find new vendors for the same items, albeit at a lower cost? No sense paying $75 / CAL, when we can get them for $50 / CAL from someone else. Should be we payi
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: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.
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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
move them from IT to other engineering costs.. (Score:5, Interesting)
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.
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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.
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It's all about the business case (Score:1)
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.
Know Value (Score:2)
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
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.
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I am not so sure. I think anybody of any reasonable skill level had already left Yahoo at that point, so this decision, while stupid, may not actually have much impact. And said blonde will still get a ton of money out of this, even if she completely fails. We need personal liability for mismanagement and everything besides a small base-level salary tied to long-term success. Maybe that would cause managers to actually start to care about doing it right again. At the moment, they optimize a few quarters, ge
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For the cost of one year of her salary, how many people could they send through business school themselves and just pick the best one when the dust settles?
What do you get for the $$$ (Score:1)
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
Pick a number, any number (Score:1)
I'm not saying this person is right. (Score:2)
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
Embrace the change and kiss the arse (Score:2)
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
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: (Score:3)
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
I am Cornholio (Score:2)
Or some place that makes contact with white paper several times per day...
Depends (Score:1)
You're going about this all wrong... (Score:2)
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
Re: (Score:2)
Accounting tricks (Score:2)
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.
Its not all that complicated (Score:1)
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
IME, it all comes down to numbers (Score:1)
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
Ridiculous software licenses? (Score:2)
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
got a couple of decades and alot of money. (Score:2)
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)
Not a problem (Score:1)
Slashing IT costs (Score:1)
Test Equipment (Score:1)
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
That *is* a lot of money (Score:2)
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.
Correct accounting (Score:2)
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
At The Other End of the Spectrum... (Score:2)
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
5.2% of gross is average for US companies (Score:2)
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
Mediocre (Score:1)
This.
The mediocre intellect is running the world. And we are allowing them.
A suggestion (Score:2)
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.
Explaining Binary to an MBA (Score:1)
relative or absolute decrease? (Score:1)
Re: (Score:2)
I don't agree.The resignation letter is a smart move, but don't be honest about the reasons, fabulate something about new opportunities or the like, so he cannot give you the shaft for telling him the truth, namely that he is incompetent.
Re: (Score:3)
You do realize that outsourcing at this size is very expensive, do you? Probably not. Outsourcing at this size cannot cut cost and provide the same level of quality, because the additional layer of communication actually increases cost. Hence outsourcing will either be more expensive or massively reduce quality.
I have seen that several times. Jobs that were critical would before be done by two experiences, senior engineers to make sure they would be done right. After outsourcing, it was suddenly one junior
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: (Score:2)
Re: (Score:2)
uehm.. that's what he was asking. that's what the entire ask is actually about. the percentages at other companies are highly irrelevant though because he has engineering costs in the same bin.