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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
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.
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.
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.
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.
Show what you'd lose at a 50% cut. Show him the things that they want to have, that would go away if they cut that much. Often people fail to appreciate what a budget is spent on and if it gets explained what they'll have to trade off they'll be more accommodating.
You are giving the person tooooo much credit!
Look it - I've been there - HIS boss is telling him to cut costs and HIS bonus is riding on it. Got it?
HIS BONUS.
I'm gonna tell you right now what he'd say to you - "You need to work with less." with a look of he doesn't want to hear anything and if you don't like it, there's the door.
Yours,
-AC, MBA
The 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.
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.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
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+
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 person, that in addition did not understand the problem.
That is what outsourcing really does: Give you massively worse quality, but hide the fact. For a time.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
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
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.
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?
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.
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!
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
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.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
It makes you question the validity of the first half.
The worst I saw, in a steelworks two years before it was shut down, was the metric of "tonnes of steel per man hour". The graphs showing that metric just kept going up and up as profits kept going down. Various managers were gaming the system with poorly trained contractors whose hours did not show up in the metric, maintainance was cut back, and downtime costs did not show up since people were sent home. In the end the gamed metric of "tonnes of steel per man hour" was at a very impressive number when orders could not be filled, sales were down and the entire place with sixty thousand staff was running at a loss instead of the impressive profit three years prior. The manager responsible for that moved on to wreck another part of the company and the ruins of the entire thing were picked up at a bargain price by some Swiss bankers.
Apparently, it is also a very old problem. Just found this:
"A good decision is based on knowledge and not on numbers." - Plato
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
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?
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