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BOFH: Balancing the budget...

With an end-of-year purchasing frenzy

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The Essential Guide to IT Transformation

Episode 42

"Got a bit of work on I see," the Boss says, peering around the large mound of cartons clogging up Mission Control.

"No, no, things are very quiet at the moment."

"So what's all this then?"

"This," I say, tapping on a carton. "is a... laptop, one of a batch of... nine, while this >tap< is a top-of-the-line workstation, one of... twelve. And those >tap< >tap< are ultraclear extra large flat panel monitors with inbuilt speakers and USB hubs."

"And you're going to install them where?"

"Nowhere," I say. "No, this is part of the annual end-of-year purchasing frenzy."

"I'm not sure I understand?"

"Of course you don't, you came from the real world. You see here, at this company, we use the Government model for budgeting where if you don't spend all your budget in a year you obviously didn't need it in the first place and so next year's budget is cut. If you overspend your budget the overspend gets taken from next year's budget. If you just spend all your budget in a year then that's obviously a good number and one which should be used for subsequent years."

"I... see... And your point is?"

"EVERY department pinches pennies all year and doesn't replace anything unless they really have to. Come the end of the year they all have money left over which will be taken off them by the beancounters - and worse still, removed from their budget the following year - so they rush to spend it on anything that can be purchased and delivered before the end of the year."

"Yes, but I still don't see how this has anything to do with those boxes."

"Okay, so IF the gear arrives here and gets receipted in this calendar year then the department pays for it in this year's budget - and they meet their budget target."

"Yes..."

"But if the gear is delayed and gets receipted AFTER this calendar year then it comes out of NEXT year's budget, which will be significantly lower than last years - because last year's wasn't all spent."

"You've lost me!"

"Okay, say you have a department budget of 30 grand to spend on office and IT products. You scrimp and save all year so that you've only spent 10k by the end of the year. You order 10 superduper desktops with large screens, etc, to spend the remaining 20k so that the beancounters don't cut next year's office and IT budget to 10k."

"Uh... yes," the Boss says, thinking furiously.

"So IF the gear arrives this year you get 10 flash desktops AND you get an office and IT budget of 30K next year - but if the gear doesn't get receipted until January then the beancounters will have cut your office and IT budget to 10k and you'll have a bill for 20k worth of flash machines to pay for in that calendar year."

"And these boxes haven't been receipted yet?"

"Oh no," the PFY responds. "They're still in delivery."

"Until when?"

"Till about 4:45pm on the last day..."

"...What happens then?"

"Generally, we ring the department up and tell them that only part of their order turned up. Like say 5 machines - which they can accept or send back for a refund. Now NO ONE wants a refund because that means they'll get less money next year - so they take the 5 machines. Then, we tell them that to make sure the beancounters are happy we'll SAY we received 10 machines and just fake the inventory system. They get some of their machines and their budget's not cut. Everyone's a winner!"

"And what happens to the other five machines?"

"That's the beautiful thing - we use those to replace our machines!" the PFY says.

"But... don't you have an office and IT budget?"

"Course we do, but we spend most of ours in the first week of January in case there's a budget cut during the year."

"So at the end of the year you have nothing?"

"Nah, by the end of the year we're usually around 20 grand under."

"So you have less money next year?"

"Nah, we just spend the amount we put in our budget for the year."

"But that'll mean that you'll be twenty grand over budget next year - which will be cut from the year after's budget!"

"I think you mean forty grand over budget," the PFY says. "Because we overspend by that twenty grand again."

"It's a game we like to play with the Beancounters," I explain. "They try and curtail our spending by cutting our budget, we get machines from other areas and keep spending regardless. "

"But surely they'll catch onto what's happening and ask for some form of audit of machines, where they came from, and what you're doing with your money?"

"Yeah, that does happen," I admit.

"And surely there's some form of penalty or financial oversight to be answered to?"

"Yeah... not so much."

"But aren't they just going to not allocate you a budget at all and just refuse to pay the invoices you've generated?"

"Indeed they do."

"So what happens then?"

"Whose machines do you think are blocking up our office?"

The Essential Guide to IT Transformation

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