Al Mulnick’s Personal Blog

April 20, 2017

Is Cost Avoidance Strategy The Only Strategy You Need?

Filed under: Uncategorized — amulnick @ 6:00 pm

Recently, I was engaged in a spirited conversation with a colleague regarding the real value of a cost avoidance strategy in a large company. His assertion is that cost avoidance would get you fired because the business leaders only care about cost savings. I’m looking for a more balanced approach.  I understand the concept of cost savings, but it makes me think – is there no value in cost avoidance?  Even more questions start to come to mind:

  • What happens if we only focus on cost savings year after year?
  • Are managers incented to budget for more and then ‘sandbag’ to show cost savings?
  • What’s the real story here? Why is everything so relative and interpreted in so many ways?
  • How does this approach line up with culture?
    • Does it impose a culture-add or culture-fit environment? Cause vs. effect?

An organization, much like your own body, is made up of parts that need to work together.  You emphasize certain aspects of your organization to achieve specific goals.  If you want to be a world-class runner, you need to emphasize running in your workouts.  A boxer?  The muscles needed to box should be emphasized.  A swimmer? Less running and more swimming, right? But much like a runner, a boxer or a swimmer, you should not just emphasize one thing or you’ll risk injury. We can view injury much like a quality issue in an organization – it may not kill you, but it can sidetrack your otherwise hold you back from your peak performance. Even Tiger Woods figured out that he needed more than just golf to succeed – he was an avid weight lifter in addition to his golf practice.

There are three types of costs we’re talking about:

  1. Cost-Savings
  2. Cost-Avoidance
  3. Opportunity Costs

Looked at another way, it is kind of a past, present and future look at your costs.

How do I see the problem? I view cost avoidance as an efficiency gain and as a way to strengthen other complimentary areas of your business.  Efficiency in economic terms as described by Investopedia, “Economic efficiency implies an economic state in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.” http://www.investopedia.com/terms/e/economic_efficiency.asp . When was the last time we ever saw perfect efficiency in any organization?  I never have.  I’ve seen waste in all kinds of environments and processes.  I’m paid to see that kind of waste and sometimes to address it.

Ok, so what is cost-savings in comparison?  Cost savings refers to a cost already incurred vs. one that you avoided.

https://www.business-case-analysis.com/avoided-cost.html basically states that all the costs are related and relative.

In my experience, that’s accurate.

Does that approach scale in a multi-national, extra-large organization?  Or does that only apply in a small business where everyone knows what everyone else is doing and can complement those actions?  What’s the right approach?

That depends on what your goal is.  If your goal is organic growth in a least-cost sustainable way, you need balance.  If you intend to grow via acquisition methods, maybe you want to run your business units like small businesses that don’t share anything other than a name and tax number.

Focusing only on cost-saving is short-sighted and leads to huge and expensive quality issues later.  Sometimes that is really important, especially if you’re a very small organization with very little cash flow.

But consider this: if we only focus on cost savings in year 1, we would necessarily cut costs.  Sounds good right?  But in practice most people will cut costs by looking at it through the lens of what they can absolutely do as the bare minimum for their job.  They will limp along focused on cost ONLY and will miss the opportunity benefits that can come with healthy growth.  They are no longer focused on healthy growth, but rather on cost savings.  Now in year 2, the same thing happens.  Your focus is on cost savings and no longer on growth.  Year 3 comes along and you are running an emaciated organization.  For 3 years in a row you cut costs and never invested in quality and expansion.  I’ve seen this happen to the point of failure (injury) in several organizations.  It’s usually looked at as the problem with IT – you have 70% of your budget spent on maintenance before you even finish your budget.  It’s hard to innovate.

If this was your body and you focused on only cost-saving (think caloric intake), your short term gains would be to slim down. Goal achieved, right?  That’s cost saving.  But the long-term effect would be to fatten up the next time you had the access to additional calories. That’s quality issues.  The same happens in business when you myopically focus on just cost savings.  You enter into a see-saw of benefit and low-quality and then trying to fix the problem.  Rinse. Repeat.  As a side note, the diet business is a multi-billion dollar business for a reason.  A lot of people want short term gains over long term discipline.  They pay well for that convenience.

See what’s missing? The business leaders cannot see (nor should be expected to be able to see) how their choices impact the broader business and it stifles innovation.  So they cut year after year until they move to another line of business and do the same thing.  Meanwhile, that line of business they came from is sold or otherwise shuttered because they no longer are profitable and the business misses out on Opportunity Costs.

What does it all mean?  It means balance in business is important.  There are times that cost-savings are the absolute right answer.  There are times when you must become more efficient and emphasize cost-avoidance.  And never take your eye off the Opportunity Costs and benefits it may bring.

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August 8, 2012

Olympics 2012 – August 8

Filed under: Uncategorized — amulnick @ 9:12 pm

August 8, 2012
Happy birthday, Ryan! Yesterday we spent some time sightseeing. River ride, natural museum of history and a train ride to the wrong location.

Lots of fun!
Today, Olympics!!! We went and saw the taekwondo quarterfinals and semi-finals. Very cool. After that, a walk on the tower bridge and dinner

on the bank.

All and all, a really good time was had by all. Now with mixed feelings, we’re getting ready to head back to the USA. I have to say this was a

great trip so far. we’ll have to see what the next leg of the journey has to offer. I’m sure it’ll be a great adventure though!

Cheers!

Al

August 6, 2012

Olympics 2012 – August 6

Filed under: Uncategorized — amulnick @ 7:55 pm

August 6, 2012
Westminster.  Today we went to see Westminster Abbey.  Took the walking self tour.  They gave us little phone like devices to listen to various

historical facts.  For the Olympics, they also have groups of young folks putting on dances from around the world out on the lawn.  Kind of like

a carnival.  Really is a lot of fun. 
Before going, I bought some London Passes.  The London Pass gives us access to all kinds of attractions and discounts on others.  After looking

at it a little closer, we have access to the river tours.  Yay!  Tomorrow we’ll take the river tours and see if we can find the changing of the

guards or stop off for a spot of tea with the queen. 

Speaking of the queen, we saw some pictures of her at Westminster.  They had her life in pictures since she was 11.  She was very pretty as a

princess and England does love their royalty! 

We also took a detour.  Wrong direction on the tube.  Ended up on Carnaby Street.  Cool, but it was a lot like Rodeo Drive in Beverly Hills. 

Lots of little posh shops (notice the new use of the word; I’m learning the lingo, yeah?).  It was fun though.  Interesting to see. 

Hoping to take a river tour or two tomorrow and possibly to Harrod’s for tea if the queen is busy. 

Cheers!

Al

August 3, 2012

Olympics 2012 – August 3

Filed under: Uncategorized — Tags: — amulnick @ 8:30 pm

August 3rd, 2012
Today was interesting. We’re getting acclimated to the local environment. Learning. We spent the day in London, but we’re staying in

Carshalton. Carshalton is actually very nice, but it will mean we are going to have to head to the airport the night before most likely. Should

make for a tiring night that night. Turns out we did exactly the opposite of what my dad and I did when we were here 23 years ago.
Looking forward to tomorrow. Catching up with an old friend and doing some sightseeing.

London rocks!!!

Olympics 2012 – August 2

Filed under: Uncategorized — Tags: — amulnick @ 8:29 pm

August 2, 2012
Been a long time since I’ve blogged. A very long time.
A lot has happened since then, but not much of it very interesting. Certainly not enough to write about it.

This morning, Ryan and I are taking advantage of more than 8 months of planning for his birthday present – we’re in London for the Olympics! Ok, so not everything goes perfectly. Or does it? Like so many things I’ve gone through, especially some tough times in the past few years, I’ve come to realize that it’s never easy to tell what’s “good” or what’s “bad” until much later. For example, I was upset for a long time about family members that are angry at me and exclude me. Now that I’m in London, I can easily say, without a doubt that it’s worked out well. Ryan and I get to take advantage of having more available money and we’ll have a great time.

Another is that I booked the hotel months ago. I thought it was in the south of London not far from the Olympic park. Guess what? Nope. Turns out it is closer to Gatwick than to Heathrow. So what? I specifically chose Heathrow to fly in to. We took a different route to get here (via Newark) when Gatwick would have been a direct flight. Is that a bad thing? Two tube lines and a train ride later I think it’s still too early to tell, but it’s looking like this was a good thing. We’ll be outside the London craziness, but a few minutes from the train station.

I love the London transport system. Once you adjust to it, it’s incredibly convenient to get to anywhere in the London area. London is very large by the way. But with a very little effort, it’s very easy to get anywhere you want to go in London.

Ryan is helping me out. For some reason (lack of sleep is no excuse!) I seemed to be in a daze when I landed and it took me a few stops to “get sorted”. Ryan took over and is keeping me straight.

It’s still too early to tell if this is a good thing to have a hotel so far away (it’s about an hour or two), but honestly, it’s looking like it’ll be a great thing to have happened. We’ll know for sure when we go to fly out 🙂

And honestly, this time with Ryan for his birthday? Priceless!!!

More to come….

Al

February 4, 2009

Don’t Give Up

Filed under: Uncategorized — amulnick @ 4:00 pm

I found this poem today. It reminds me of when I was a kid and my sister and I would fight.  Later she tells me that she remembers those fights and how she was just about to give up when I gave up.  That meant a lot to me later such as when in boot camp.  Many times, when I was just about to give up, I would remember her saying that and keep on. 

It always worked out somehow…

 

Whatever you do, don’t give up
When nothing in your life is going right, when problems
torment you and money worries surround you…
Rest if you need to, but whatever you do, don’t give up.

When too many mistakes have been committed, when your entire universe
threatens to crumble and, exhausted, you feel your confidence ebbing away…
Rest if you need to, but whatever you do, don’t give up.

You know, life is strange sometimes, with its share of surprises and unforeseen
events, and it is not given to us to know in advance how far we will have to
travel or how many obstacles we will have to overcome in order to achieve
happiness and success.

Think of how many people stopped fighting, when perhaps all it would have
taken was just one more tiny step to transform failure into success. And yet,
one step at a time is never that difficult.

So you must have the courage and the tenacity to take
that tiny step more, knowing that life is a great and powerful friend that is
always there by your side, ready to help.
You will soon find that this attitude will summon up, from the deepest part
of yourself, life forces that you never even suspected and that will help you to
achieve what you undertake.

But, first and foremost, remember:
When, in your life, difficult moments arise…
Rest if you need to, but whatever you do, don’t give up.

Anonymous Author

October 1, 2008

Political Humor

Filed under: Uncategorized — amulnick @ 1:25 am

Here in the US, it’s political season.  One of the best things about it is the humor.  The web has really brought us closer to many humorous thoughts and musings.  I particularly like this site: http://www.unclejayexplains.com/2007/09/03/uncle-jay-explains-the-news-september-3-2007/

September 23, 2008

Busy Part II

Filed under: Uncategorized — amulnick @ 4:22 pm

I have been quite busy.  My last post about the work I was doing related to the name resolution issues my employer had.  I work on site for a global financial services company as a contractor.  I work on various projects covering various computing specialties.  A brief bit about my background  I was originally trained to be a telephone switchboard repairman for the USMC.  I quickly diversified to reparing radios, computers, lan’s, etc.  I became a cleanup guy for various technical issues.  I also quickly realized that repairing the root cause has much better and more definitive results than treating symptoms.  Since much of the root cause is based in “how” technology gets employed for various issues, it only made sense to move to those areas of the IT business. I moved on to the civilian world and got into a new field (at the time) – email. I love it. It has all the technical and people issues that keep me happy.

Now?  I also work on technical issues ranging from desktop standardization to name resolution to email issues.  In fairness, the company I’m working at right now has a good messaging team that handles the overall environment.  My interaction is more advisory (sounding board) and looking out for the interests of my business unit. I also have a lot to do with the Active Directory use and implementation as well as the unix integration work. I work with various products including tools from Quest, NetApp, RSA, and many others to help drive technology forward and solve business needs.  I also work to identify and fix process issues because as I mentioned above, the root is the best place to solve many of the technology issues faced by companies I’ve seen.

So, on to the DNS issues. 

DNS was an issue because the primary forward zone was set to only allow authenticated updates.  The reverse was, however, set to allow anyone.  Since the majority of the hosts were not in the same realm as the forward zone, most failed to update their records.  That led enterprising technical personnel from various business units to adopt unsanctioned workarounds to get their jobs done.  I’d have done the same for what it’s worth. Unfortunately, it did not help the name resolution issues. 

I worked with many of the business units to migrate their workstations to the primary Active Directory domain.  I also worked to help them change their process to adjust to their “new” domain.  I also worked to idenfity the issues with DNS/DHCP and how to fix them.  A co-worker and I worked with the vendor to better understand the cycles needed and I also wrote code to fix permissions and report on the status of the updates. 

To date, it’s working much better. We still need to go after the network and server outsourcers to adjust their process, but for now, we have stability restored.  We also have a working implementation (for now) of name resolution.

 

Network is next. We need to get them to true up their processes on a global scale.

I’ll keep you posted as to how that goes.

Cisco’s Recent Acquisition of PostPath

Filed under: Uncategorized — Tags: , — amulnick @ 4:06 pm

I was reading about Cisco’s recent acquisition of PostPath. Very interesting.  Also noticed that Kevin Johnson has left Microsoft to take on the CEO role at Juniper. These are interesting times…

I believe strongly in competition.  I’ve seen what happens when a company like Cisco or Microsoft don’t compete.  It’s ugly.  Competition is far better for them and more especially for their customers.

http://blogs.cisco.com/trackback/6389/iS1225rL/  for the Cisco information related to the PostPath purchase.

August 30, 2008

Working on it

Filed under: Uncategorized — Tags: , — amulnick @ 6:23 pm

Turns out that I’ve been busier than forecast.  What is it I do?  I work in the IT field as an enterprise computing professional.  I work on projects from patching and maintenance, to identity management, to name resolution, to desktop configurations. I apply highly disciplined troubleshooting techniques to solve complex global problems. I fix processes and create new ones where needed. I make recommendations to senior managers for long-term improvements and strategy.

I’ve been busy lately.

As an example, a co-worker and I were working on our DDNS configuration.  When I first got to the company, co-worker and I agreed that there was a lot to be done to fix name resolution across the enterprise, but that because this enterprise is a de-centralized IT shop with shared name resolution, fixing it would not be a fast deal. Oh sure, everyone could agree it *needed* to be fixed, but everyone had different ideas how to fix it. And there were not a lot of people willing to pitch and help with the details, just the “what”.

But that’s pretty common in my business – a lot of chiefs, but not a lot of braves. 🙂

The issue?  Well, machines were “disappearing” from DDNS.   That’s a problem in and of itself, but the weird thing was that nobody could prove that the records that “disappeared” were there before.  We dutifully dug in anyway and found that there were some horrible process issues, permissions issues – both on the records themselves and for the management of the records, and perception issues as well as various other broken or semi-working processes and components such as workstations and servers that could not, or would not properly register themselves.

Fast forward a year and a half and we’ve been slowly and steadily working to clean this up.  I wrote a few scripts and .net applications that worked on the permissions.  I worked with many of the business units to get their records cleaner.  We worked with the vendor to get scavenging of stale records corrected.  I also worked to highilight the importance of process and name resolution using the outages as backdrop for those conversations. 

These things take time. A lot of time in this type of environment.

I’ll write more of the details about our escapades at a later time.  For now, we’re on the road to healthy name resolution and will be there sooner than if we had not done these tasks.

Till next time.

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