Wednesday, April 25, 2012

Not Giving Control in the Name of Improving Efficiency

The following is the notice that is sent to all the heads of the business units in a company.

We are changing the process of purchasing the hardware in our company. Till now, all the business unit heads are buying the hardware for the needs of their business units. Going forward, the entire hardware would be bought by the IT department. Business Units Heads will have to raise a request through IT department. IT department analyzes the request, and buys the most efficient hardware which satisfies the business requirements and reduces the cost for us. This is to improve our efficiency and reduce the costs.

Director of one business unit wants to buy a powerful server which costs around $100,000. He has a budget of $10,000,000 to run his business operations. According to the new rule, the hardware purchase has to be approved by the IT department. For that purpose, he meets the Director of the IT department.

Director of Business Unit: I would like to purchase one powerful server that costs around $100,000 for processing of some huge data.

IT Head: Why do you need that much powerful server? Why cannot you use normal computer for the same? If you need more CPU power, then use multiple computers.

DIR: We get huge data every month, and we would like to get the analysis results as soon as possible to take better decisions sooner. The application that we have does not support parallelizing. So, we need powerful server.

IT: Then, ask the application vendor to add support for parallelization.

DIR: They may ask $500,000 to support parallelization.

IT: That is your assumption. It should not be that expensive. If they write code in a clean way, then it should be straightforward to support parallelization. Raise a Request for Proposal (RFP) and ask them, how much they are going to quote for this. Or just do it yourself.

DIR: They write very clean code. That is not the issue. Since, they are product based, their cost is very high, and we are not allowed to change their code. If we raise RFP, that also would cost us minimum $25,000.

IT: Nobody asks money for RFP.

DIR: They don't ask money explicitly. But, they would add this expense in other items that we buy from them. Even if we get the parallelizing capacity, we will have to spend more time on our side to make sure that, the application is running in all the services, and restart it, if there is any failure. It requires me to allocate few people explicitly for this.

IT: Then, automate it. You don't need to go to that expensive company for automation. There are many other companies out there, which can automate these for very less cost.

DIR: Can you take care of the automation?

IT: No. We are too busy. We don't have enough bandwidth to do those. You will easily find plenty of companies which can do it for very less cost.

DIR: One of my team members assured me that, if I provide him this hardware and one day per month, he would provide me all the data that I need, in the least amount of time, without asking me anything else. If I have to go by your approach, then myself and my team members will have to spend lot of time in getting these things done.

IT: Initially yes. But, we would be saving lot of time in the long run.

Later, that director gave a contract to the original vendor, which developed the application. By that contract, the vendor would run the data analysis and give the analyzed results to this company. For this, the vendor would get $100,000 per quarter.

Inspired by a real story. There are many companies, which are surviving only because of these policies in big companies.

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