Sunday, September 17, 2006

Working for the Middle

Intel is going through a large efficiency exercise. Those of us who work there have heard all about it for months. There's been some press about it as well. Intel makes good money, but the stock has been flat for a while. Sales are only ok, but will get better as the new processors gain momentum. But earnings are down, so cutting expenses makes sense. Given Intel's employee population explosion over the past few years, cutting some jobs seems reasonable, particularly in areas that appear to have redundancy.

But there are several things about the efficiency effort I don't get. In a recent IT open forum meeting, our CIO mentioned that the "efficiency team" (I'll address this more later) looked at Intel's IT expenses relative to those of other companies and found that they were higher than average. He said the upcoming cuts would help to get us in line with the average for IT spending.

When I heard that, I thought it sounded fine. If we're spending more in IT than similar companies, then we're probably over spending. It sounds right. Right? But that word "average" kept sticking with me. Average. Hmmm... And then it occurred to me: why does Intel want to be average? What at else at Intel is expected to be average? Do we hire average people? Do most people work average hours? Do most of us have average passion about our jobs? Do we produce (or want to produce) average products? Why do we want IT average costs to influence what Intel spends on IT?

I'm not advocating that Intel necessarily needs to spend more than the average on IT. And I'm not saying that knowing what the average is, and knowing what we spend relative to it is a bad idea. But to use the average as a target seems inane. We hired a consulting firm to help us figure out efficiency. We sent the new CFO off to work with them for months. He took two IT staff members and had them working on IT efficiency for several weeks. And the best these guys could come back with is that our spending should be average? I can't help but ask: What the fuck are these guys thinking? How is this leadership?

Intel should spend what it needs to spend to make the company successful. If the board, and the CEO, and the CFO don't want to spend what we should, then make the hard decisions needed to cut back on IT services. But let's do it intentionally, for specific reasons, and know exactly what we're getting. Perhaps Intel has good reasons to spend more than average. Maybe IT services are a strategic advantage, so spending more gets us more productivity. Or maybe the exact opposite is true, and we should be spending less. It doesn't matter, provided that Intel determines what it needs to spend to do the right job.

It's possible that the CIO was using this as a reason to justify the upcoming layoffs, and that this really wasn't how the IT budget was determined. And if he was using this to try and soften the blow, or give some reasoning for the cuts, it didn't work. At least not for me. I want to know that Intel is looking hard at the company and choosing where to spend and not spend money, not just copying others. Do we want to spend an average amount on marketing too? What about finance, HR, and legal? In some of these areas, I have not doubt that Intel can be below the spending average if we work at it.

There are two key messages I'd like to give the CEO, CIO, and CFO: Striving to hit an industry average target seems like the easy way out to cut spending. The second is a recommendation: don't ever tell Intel employees that the goal is to be average at anything, even spending.

4 comments:

Josh Bancroft said...

Good post - it's frustrating sometimes to see the decisions that are made with a lack of transparency into the process. It's hard to get behind something without the "why".

Keep up the posts, IT Guy! The more interesting/provocative the better! There's a lot of discussion that needs to happen here.

Intel IT Guy said...

I agree, Josh. They are keeping the process well hidden, and I don't know why. They hold regular updates, which reveal little about what's really happening. And btw, I'l not stupid enough to think that the CIO and his staff aren't doing some real work here, but we can't see it, and the "let's get to average" goal undermines their efforts.

Gator Blogger said...

For a different perspective on this, I'd think an above average company would be spending a smaller percentage than it's competitors (doing more with less). If you consider it that way, you could say moving to average is an improvement. Of course that means you're spending more somewhere else say research. If you're generating better than average results from research then great!

sactoheath said...

one thing that continues to not be answered is that poor decisions were made at high levels of the company - will those people be held accountable, or will it only be the first line employees who suffer the consequences...