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900 Greenbank Road
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By Wayne McKinnon Product companies are expected to spend a portion of their revenue on research and development, and when these budgets are cut, the company’s stock can suffer due to the effect that reduced research will have on the company’s long-term profitability through reduced new product offerings. But for operational units inside any organization, reduced spending on maintaining an engineering environment can also lead to long-term pain. In order to effectively support a corporate computer network, an engineering test lab should be able to accurately mirror the production environment. Without the ability to perform testing in a safe environment, well-intentioned upgrades to production equipment can turn into costly mistakes when the procedure does not go as planned. Problems are often the result of new components that do not fit as expected, or affect another component in a negative way. These components can be hardware or software. Justifying the cost of outfitting an engineering lab can be a difficult task especially if the budget approvers are looking for measurable results that are short term and the indicators are financial. The typical measures used to indicate value for money spent are wrong. These measures of dollars saved by implementing a new solution or fixing a problem simply do not work well enough to evaluate the effectiveness of an engineering lab environment. They leave no flexibility for investigating potential future solutions that contribute to supporting strategy decisions. While controlling engineering budgets tightly can lead to savings in the short term, the long term cost increase can be measured in terms of missed opportunity. To properly evaluate and justify engineering budgets, other success factors must be considered. Factors such as reducing risk; avoiding errors; ability to support strategy decisions; providing new opportunity, are better. These are not easily measured in dollars and cents. Instead value can be identified as a percentage of improvement over the current situation, or the ability to implement strategy decision very quickly. The clearer and more rigid a corporate strategy is, the easier it is to predict what spending should be, but it simply is not possible to remain stationary while the rest of the world is moving so quickly. Keeping up isn’t the goal, remaining profitable is. Recognizing this fact, realize that a certain number of engineering projects will never result in any useful solutions but will provide benefits no less. These benefits include having your bases covered in case of an unexpected shift of focus, as well as investing in increasing the knowledge and abilities of those who you depend on for support.
Wayne McKinnon. 900 Greenbank Road Suite
531, Nepean Ontario Canada K2J 4P6 phone: (613) 860-1384 Fax: (613) 825-4895
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