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Ask Slashdot: IT Spending In Engineering?
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?"
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.
Sheesh, evil *and* a jerk. -- Jade
Is the new director in engineering or IT and does your firm use just one predominant IT systems/infrastructure provider?
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.
If there is no way to actually reduce the budget, quit. It's a better way to go then watch as the company fails.
If you can't measure it, you can't manage it. What sort of metrics do you have?
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.
Rather than waste time looking for validation that the status quo is correct why don't you ask others for suggestions of ways to limit your spending? What services do you use that could be outsourced? Rather than build your cluster can you use systems from HE or Amazon? What other changes could be made?
If you do run your own in-house cluster can you sell the downtime?
Get creative trying to find a solution. Or, get creative on your resume.
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.
world was created 5 seconds before this post as it is.
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.
"Do not meddle in the affairs of dragons, for you are crunchy and taste good with ketchup."
But to save paper costs, just duck your head into his office on the way out and tell him to fuck off.
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 their laurels and thinking they're doing 'just fine' without any way to try and judge that metric.
Getting a baseline on what similar departments might be spending can sometimes be helpful. But your goal shouldn't just be to find some metrics by which you compare favorably to the competition and judge that everything is fine. Every time you have to sign off on a purchase order for new hardware or renew a license for software you should be asking questions about value. Change by itself is never without risks, so the mere disruption of existing workflows might be reason enough not to switch to some alternative, even what that alternative is 'clearly' better.
You should be able to make your case for all your spending, such as why it's needed and why it's the best choice for your business. It doesn't always boil down to easy numbers for the bean counters, but at least be able to put on a good show.
A steaming cup of soykaf would be real wiz right now.
He says: Reduce spending 50%
You say: ... but IT capitol purchases are only 8%
He may not be talking about capitol purchases ...
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.
Or in other words, there is bound to be some leeway in consolidating clusters and organising jobs and so on. And there's software around to do it.
It has long been standard practice to get your developers, and I'd imagine your engineers too, the latest hardware just so they can work "efficiently" (altough unaccountably still on operating systems that treat the user like a child and generally hold him back, but I digress). This has all sorts of side effects, including leaving considerable headroom idling you could be using for computation instead.
The peecee paradigm also implies the idea that if not each developer, then each group would like their own little cluster. Compare supers, that'll run jobs for many people, groups, even companies. Or mainframes. Things built to run at 99% all the time. Consolidation, given proper management, can perhaps unlock some savings.
For clusters, you need clustering and job management softare. (I won't recommend the outfit that sells exactly that in the Netherlands because they use PR people (in the UK) for their HR, I kid you not, and it went downhill from there, but there is at least another in Moscow, silly valley will have at least a few, and then there's academia.)
Whether you can squeeze out the overage and make it useful is something else again. If it turns out that's more expensive than simply throwing more hardware at the problem, well... then you will at least have an argument with pretty pictures and cash figures to throw back at the director, no?
I mean, hey, you're an engineer, put numbers on the consequences already.
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
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.
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.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
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 you can outsource within the limits allowed by applicable security and regulatory constraints. Of the IT enabling expenses in line of business accounts, consider what portion of those are O&M vs new expenditures. Can new expenditures be deferred without impacting productivity/revenue? Can you consolidate, outsource, or invest/buy-down continual obligations (it's amazing how many orgs won' consider that b/c they're too short sighted)? Ensure each of those areas is related to an overarching business strategy ... that's your justification for those areas. Make sure that the linkage includes a rough discussion about the revenue/productivity impact of each area both for new purchases/continual obligations for both the engineering and enterprise IT expenses.
Obviously, you're not going to cut 50% of all IT spending and still have the full level of effectiveness and efficiency, not within a FY. Perhaps you should consider a more phased approach?
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 offering for some areas a seismic shift in workload and capacity and I think spending in some areas in terms of investment can harness good returns on the funding/cost side.
*In the above, I am not agreeing with cuts per se, but if they are there, and are viable, then it has sense to take some time with them and examine the cases.
We`re all equal
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 worth standardizing to very few models of printers and finding toner from someplace reliable other than the manufacturer.
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 spend - that would be silly. He/she/it just wants to look like they are making a splash as a new appointee. That's how they gain their reputation and more importantly: their bonus.
The only thing to look out for is if your manager is somewhat clueless in playing the game at this level and actually believes the diktat that's come down from on high. If so, just put in a transfer to a different department. Your boss will be too busy wondering what hit them to worry about you.
politicians are like babies' nappies: they should both be changed regularly and for the same reasons
banning telecommunting.
Easy reduce your budget to 0.8% - that is email and other necessities. Shut down everything else. You will get a bonus for reducing spending 90% and later on you will get a bonus again when you save the company by switching everything back on again.
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.
putting the 'B' in LGBTQ+
Or do you measure, profile, and optimize? You obviously can't just go ask Microsoft or Facebook how they allocate their budget, but do some research to back up your gut impulse, and as others have said, put together a presentation with the data you do have showing what will be lost. And be thinking about your IT priorities as a backup plan in case you can't stop the axe from falling.
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.
politicians are like babies' nappies: they should both be changed regularly and for the same reasons
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 offering a significant cost saving like say dropping expensive Microsoft Office licenses for Libre Office (especially in the engineering dept.) then make the decision to save some money.
If you are in IT in this company, then an ill-conceived directive to cut IT expenses by 50% sounds like the clearest possible signal that you need to find a different employer as soon as possible. A 50% cut is so severe that the reason doesn't matter - perhaps the company is about to go belly-up without drastic measures, perhaps management is entirely incompetent or perhaps management sees IT as useless (i.e., management is incompetent). All of that is very bad for you. Polish up that CV and get it out there posthaste. Do that before you start spending all your energy on convincing management that they are wrong. At this point, what you need is options.
If you are not in IT, you need to figure out if the company is about to go belly-up. In that case, you're in the same position as someone in IT - you need to polish up your CV right now. Even if you intend to go down with the ship out of loyalty, you'll still need that CV once the company isn't there any more. If that's not it, then possibly wait around a little bit to see how things will go, but if you've got management who is happy to remove tools vital for your job in order to save a bit, that is a signal that your output is not valued or that management is incompetent. Possibly both. Either way, that doesn't bode well for your future in that company.
This is all unless, of course, IT really is 100% over provisioned and a 50% cut is appropriate and can be carried out without layoffs? That sounds very unlikely, though.
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.
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 dollars per license.
The appropriate way to determine if you're spending too much, too little or just enough is to determine, specifically, what you need to function. Establish a per-PC baseline in terms of hardware (which may vary for certain departments), your refresh time for each area then then the required software that everyone needs then the additional software that certain departments need. You can also use the additional software suggested requirements as an additional baseline for hardware requirements. It may also be beneficial to stagger departmental refresh times to meet yearly budgetary requirements.
You should be providing information to your director to show "this is what we need to function and these are the costs" rather than trying to justify purchases based on comparisons. He can't dispute requirements... or perhaps there's a necessity for him to dispute requirements that people feel are requirements yet they're more of a want than a need, which is a typical experience at engineering firms.
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.
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 suggesting cuts might 'tempt the waters' and 'lets see what happens when', and my get short term gain (and promotions), but long term pain can result. Also no one wants to go to work where everything is broken all the time, and the phone is blowing off the hook with angry people all the time. If IT gets cut too much, people leave, the mess is still there, the data borked, and if the IT people leaving have intimate knowledge, of systems, that loss can hurt a company more than staffers 'putting the boot in' and destroying swaths of data on their way out.
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 the decision maker, if a decent business case can be made for the spending, assuming the money is even possibly available, I'll go to bat and advocate (or just approve if I'm in that position). Things like monitors, faster computers, etc. translate pretty nicely into engineer productivity. And I've usually had data to back that up.
When I've been the one asking for money, I try to give 2 or 3 different "models" or scenarios, with anticipated costs and anticipated savings (or increase in productivity), **along with** ways that I believe we can demonstrate/measure the benefit. Just saying "We'll be 25% more productive" is vague and wishy-washy. Saying, "We think we'll cut 3 weeks off of this next 4 month cycle" is something that can be measured during & after the effort. Obviously, you don't just want to make stuff up, but if the numbers are grounded in reality, go for it.
For the stuff I do, it's usually not computers or software, it's oscilliscopes, logic analyzers, simulators, etc. But the result is the same: better equipment/tools should have a quantifiable benefit. Then there is a rational, unemotional basis for discussion. And even better, when you don't get what you've proposed, and things go sideways (usually schedule), you've got a paper trail documenting what you proposed as an alternative.
And let's not forget, in a university every professor is a BOSS.
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 company will still be in business in 10 years, thats never going to happen.
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 leave that prince professor screaming about how his vision is being thwarted. At others, the prince professor, like everyone else, submits budgets from which said items would come. Sure, it may just be a single line item by the time it reaches his boss or his boss's boss, but when that prince professor has spent $4000 on toner cartridges and either has to beg for more, or figure out where in his internal budget his next toner cartridges will be purchased...
Of course, right along with this is the stupidity of "if you don't spend it, you loose it next year" is pure southbound ejecta from a northbound male bovine. If partway through a year I realize that large expense will be needed next year, and I cut back on expenses somehow during the remainder of that year (maybe by using mass transit and staying at a much less expensive hotel instead of getting a room at the hotel where a conference is being held which was in my budget originally), I should not be penalized. But sadly, way too many universities, governmental agencies, etc. think that this should be the case.
Helping build UN*X and the Internet since 1981.
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. Unfortunately, this is a big collective action problem. But that's not to say it can't be done!
As much as it's fun to pick on management, they're probably right: Engineering software licenses are obscene.
Might I suggest turning the computers off every other day?
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 because although cash flow comes from external parts, many profs have their own cash flows via grants, and because many unis are run by the profs. Could be different for you off course.
About personal stuff, I see a lot of it on the big copier/printer too, it's not like people around here are ashamed to do that. The copier has better print quality apparently.
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.
Your company probably spends to much as it is, mine does.
I have a Core i5, Dell Latitude, circa 2010. Its ridiculous amount of power for engineering CAD, schematics, board layout, research.
I do some 5% of work at home on occasion, on a 2006 era Core 2 Duo, and it breezes right along.
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.
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)
I work for a large financial institution, and fully $1 billion (one quarter of annual costs) go to 'IT' related things.
From my perspective, 8% looks like a pile of peanuts.
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 budget.
Or some place that makes contact with white paper several times per day...
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
My advice if you have a choice of who to sack is to look for middle managers. Anybody with less than 8 direct reports.
It makes you question the validity of the first half.
Imagining engineering IT spending as a percent of engineering spending is just foolish because it ignores return on capital.
I own a company much smaller than yours (the submitter), but I spend money based on return on capital rather than simply a percent of budget. If the spending results in increased revenue, that must be accounted for.
Too many of these Harvard MBA morons they're churning out today can't grasp this simple concept. These are the same people who think any engineering spending is unnecessary, despite the fact that without it there would be nothing to sell.
MS Outlook has improved a great deal and can sync with a very wide range of mail server software.
Your example was probably obsolete thirteen years ago. Please discuss things seriously instead of just throwing up rubbish.
Get written permission from him to turn off all the email and computational servers for a week, say, in the name of "reducing IT's power bill". See how much he thinks you're overspending then? When the company falls in a heap because nothing's getting done forward the written permission on to the CEO and watch your new director get booted out the door. Problem solved.
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.
Short answer: appeal to emotion. Logic takes you only so far, and most people don't base decisions on logic alone, if at all. For example, appeal to fear. Something like, "reducing our spending on IT could have side effects later, such as a miscalculation that could lead to competitors suddenly trouncing us and reducing our market share and credibility to our customers." (Clean it up and come up with a good message pertinent to your organization and your audience. Stick to your script and focus on effective delivery.)
While trashing the "suits" feels good, it's a stupid move from a tactical standpoint. Manipulate the emotions of others and you influence their actions.
Here's my tip:
Cut 80% of backup and antivirus. Then sit back and wait - in a few months - some virus spread, and wipe out the bean counter PC/Laptop and his works
Then say "Oh we cut back per your request." and see how fast you get a full funding again.
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 engineers that the average MBA into spending large amount of money into big exchange/sharepoint/AD or similar junk.
So the obvious solution to your problem is the following: restructure your division so that IT is sitting on one side with their mail and web and hr etc... servers with a low 3% of all cost.
Restructure the "big iron" into a billable commodity, that means that you define a set of "approved vendors" define a cost per "compute unit", a "recommender margin" and add it to any bill or product cost cheat.
And split the purchase of any ingeneering work station into : no brand box, big intel CPU, large screens, just make sure that each component is bellow the line where it counts a "investment", so you can hide it into the "pen, pencils and chairs" "consumables costs" linked to a specific project costs.
So you will end up only spending a little bit more than before, while looking at "over performing" at cost cutting.
And if you do it right, it'll even make somewhat sense as you'll end up with a closer monitoring of the real costs of each project, and most probably some teams will be somewhat more prudent in purchasing stuff since they will have to balance the hassle of doing the paper work vs using the station they allready have.
So unless you'll make the paper work so hard that even legitimate purchase look more trouble than honing one's CV you'll get some performance gain.
Good luck
Your gut is not a spreadsheet. Your gut is not a budget request. Your gut is not a systematic and comprehensive review of the division's budget and expenditures.
If you think you're being given an unreasonable goal, then you need to actually explain and quantify why that is an unattainable (or undesirable) goal. Show how it will negatively impact production stability, reduce productivity, increase organizational risk, and generally result in an undesirable state of affairs - THEN propose an alternate, more modest cost-cutting goal, and be prepared to justify THAT.
If all you can say is "but I *really feel* like it's not going to happen," then the goal will stand. If you can say "This will result in an increase of production incidents, more risk of security breaches, and a dramatic loss in productivity for our engineering staff, and here are the facts and figures to support those assertions," they'll sit up and listen.
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 resources to get and keep everything running.
The 10 person GIS team of the IT department is pretty much at their beck and call as well.
Karma: Can only be portioned out by the Cosmos.
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, then I would assume the department has given out that code. How is that a 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.
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 things look even better than 5.2% then promptly point out your exceptional leadership and ask for a raise...
[RIAA] says its concern is artists. That's true, in just the sense that a cattle rancher is concerned about its cattle.
Your target is 4%? My company's IT spend last year was around 2.7%. We've been given 5 years to get it under 1%. This is year one and it's already painful. I can't imagine what it'll be like in 4 years. Hopefully, I'll have found greener pastures by then.
Interestingly, that means you don't have enough network printers. Everyone's time is valuable, even the president of my company has a shared printer for his group. Pretty sure he makes more than most people at your place. Other problems were already addressed above. Easy solutions to an easy problem. Would you rather the money go to printers or something to actually educate students? Also why are you printing so much nowadays anyways? PDFs for course documents to let students download it at home and they bring their own supplies. What is so much paper being used for?
This.
The mediocre intellect is running the world. And we are allowing them.
Speed demands, Storage demands and processing demands always increase, not decrease. IT is part of the cost of doing business.
I'll bet anything that the "director" is not an engineer, or a IT person. odds are he is from Sales and marketing.
Remember that the most secessful companies (with a lot more than 2000 employes), were created and run by engineers and programmers, not sales and marketing people. Google, Microsoft, Apple, Amazon, Facebook.
Let the doctors do the doctoring, the accountants do the accounting, and then engineers do the engineering.
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.
mark, at a civilian US government agency that does research, including with clusters....
ObDisclaimer: this is my opinion, and not that of a) my employer, b) the Agency I work for, c) the US federal gov't, or d) the view out my window (as if I had one).
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?
In parallel with his random budget related demands, your phb probably has some pet project which he's hung his hat on and held up as the department's number one priority. Find a way for his demanded cuts to spoil that project and you get all your money back. In the future pad your budget with things that you know can be easily cut out. The best way I've found to do that is to be super paranoid about security and backups. In other words sign up for 3 extra copies of critical data (or something like that) knowing full well the 2 extra copies will suffice come next cost cutting season. If you get challenged on it then whoever is challenging you finds themselves arguing against the preservation of critical data. This might come off as a bit of cynical a ploy but my experience is that the only good way to counter mba bs is with bs of your own.
Just doubling the salaries will get you to 4-6 %.