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Budget For Free Software

July 20, 2014

A chat with a former colleague led me to consider this topic.  He told me that morale was at an all-time low where I used to work, and that management was laying off technical people and contracting out the work.  Now, it’s obvious that the budget for free software should be zero dollars, but apparently that’s not how it works.  I recall being told about an incident a few years ago.  I wasn’t involved in this one, but people seem to remember it because it was so ridiculous:  apparently a group was prepared to obtain a free software product, but because they couldn’t figure out how to budget for it, they bought a commercial product instead.

One incident I was involved in was a meeting to select a DNS and DHCP control system.  I assume I was invited because I had installed the original DNS and DHCP servers, both free products.  The purpose of the meeting was to review the RFP (request for proposal) that had been prepared by a manager.  I attempted to pursuade the people there to consider free products in addition to the commercial ones.  The manager and some of the participants wanted to see product documents and wanted to review responses to their RFP.  In the case of free products, there was nobody to respond to the RFP.  Ultimately, the manager considered only commercial products, and chose one of them.

This futile activity was only a symptom of a deeper problem:  managers were ranked by the size of their budgets.  They were recognized for spending money, but not for saving money.  This scheme leads to an even deeper problem: management by budget.  I have no expertise in management, but I can easily see that the number of dollars in a budget is a poor measure of the value of a group of people.  In the worst possible case, a department could be doing absolutely nothing but still consuming millions of dollars.  It’s because budget is a measure of input, but it’s the output that’s important.

Why do we even have management by budget?  At the highest levels of an organization, budget may be all there is.  When the leader has to reduce costs, they may ask all of the managers to reduce their budget by a certain amount.  That sort of action betrays a lack of knowledge of what the organization actually does.  I have no doubt that directors and managers are aware of these limitations, but they still seem to do it.

The alternative would be to consider output rather than input, to consider production rather than budget.  This alternative may well be a radical change.  How do you even measure production?  It would be easy for a sales department.  The number of items sold or their dollar value might be enough.  It might be very difficult for a support department.  What is the product?  How do you measure it?  How do you aggregate it?

I used to work in an IT department.  Everybody I knew there was busy.  Some were so busy that they put in unpaid overtime just to complete work that they considered important.  What we did was expressed in vague statements and doubtful metrics.  They were quicksand while budgets were firm ground.  We should be able to do better than that.

The only way to assess output in that sort of situation is to take the viewpoint of the consumer.  A support department must respond to demand from the consumer of the service.  One group I worked with required an owner for every service they supported, but I suppose they should have required consumers instead.

In order to determine output, the technical people (I was one) must provide details of their work.  They might resist.  (I would have.)  They might produce too much information.  (I might have.)  They would certainly consider such a request as a restriction on their freedom or an attempt to micro-manage them.  The important question is what are they doing that is of value to the department.  The only way is to make them aware of the input-output problem, and let them participate in finding a solution.  Management will have to trust that they have the ability to do this, and that they have the interests of the department at heart.

Of course, managers must also account for their work.  The benefit is generally indirect, as their role is to manage the people who do the actual production.  They too would have to somehow measure their contribution to the product of the department and the satisfaction of the consumer.

This radical change sounds difficult and complex.  Wouldn’t it be easier to lay off everybody and contract out the work?  No doubt it would be easier, but what is the value for money from the viewpoint of the consumer?



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