Computing "In the Clouds"

Ever think of moving your company’s servers into the clouds? (This means leasing servers from companies that specialize in doing this and accessing them remotely.)

Advantages are:

• No more obsolescence. Competitive pressures make lessors keep their equipment state of the art.
  
  
• No more downtime. The lessors worry about equipment not working. Again, competitive pressures. If their customers experience downtime, a competitor will snap them up.
  
  
• In case of power outages, employees can just adjourn to their homes, or to the nearest coffee house, fire up their laptops, and continue working. Lessors will have elaborate backup plans in place, in case power outages hits them. Reliability is what makes their leases attractive, after all.

Google and Amazon are taking this idea of taking your company’s server to a new level with AppEngine. You upload your software application to them and they take care of providing sufficient servers, network capacity, and so on. You just pay them a usage fee of so much per million uploads/downloads.

One last idea is to keep your dedicated servers in-house but have a reserve server “in the clouds” to handle peak demands.

Management Overhead

All products and services that companies sell cost money. Management must know what it sells are generating profits and what do not.

So how can a company show a profit on everything it sells but still operate at a loss? - By not factoring in overhead. The cost of the managers, their offices, their support staff - indeed all the indirect costs of the company has to be allocated to products/services sold in some way, manner, shape, or form. Only when the products/services are burdened with their total costs can their profit/loss be truly evaluated.

The General Motors Example

Here’s an illustration of the mentality of what has gone wrong with finances at the national, the corporate, and the individual level.

Between the years 1985 and 1994, General Motors earned $17.92 per share of stock but paid out dividends of $20.62 per share. So, where did the $2.68 come from?

But wait! In addition to paying out $2.68 more per share than they took in, GM also spent $102.34 per share on capital improvements.

But wait! There’s more: loss of market share, employees out of work (but still being paid) and under-funded pension plans and medical liabilities. No wonder they needed a bailout.

While the book is silent on how Donald Trump got himself in so much debt, the wisdom here applies to us all.

- from page 69.

Religion in the Workplace

The law does not always follow common sense but let’s start with common sense, anyway. People ought to try to avoid being “in your face” with their religion. Apart from legal issues, it is just not effective. Common sense kinds of things, like posting a favorite Bible verse on the wall of one’s own office or cubicle is allowed both common sense-wise and legally.

Cliff Ennico, of Townhall Finance wrote,

Generally, employers are required by law to make "reasonable accommodations" to employees with religious needs, just as they are required to do for the disabled. Title VII of the federal Civil Rights Act of 1964, among other laws, offers broad protections to religious-minded people.

Extreme views about separation out of religion are just as bad as extreme views about turning workplaces into de-facto semi-churches. In a controversy, both sides need to chill.

Lessons from the Oil Spill

Last April 20 the Deepwater Horizon drilling rig exploded, killing 11 crew members. Two days later it sank while oil gushed out of the broken piping below. This was an offshore drilling rig 50 miles south of Louisiana. Three companies were involved: BP, Halliburton, and a company called Transocean. The three companies are blaming the others for the disaster.

As the blame-shirking and the finger-pointing commence, one thing is clear. There was no unity of command, no central management of the project. As the different companies say the others were responsible, it becomes clear that no one was in charge. This was the first management failure.

The second is implied by the two day time lag between the explosion and the leaking. Why was there no immediate response team in place? Why was there no disaster plan? It appears there was no contingency planning done at all?

Unforeseen disasters happen to any project, no matter how small. Proper management structure and contingency planning can contain unforeseen disasters.

More info at The New York Times.

Has Print Media Hit Bottom?

Finally advertising revenue is going up for the industry. But not subscriptions. Over at the Washington Post, they’re selling Newsweek Magazine. There does not appear to be a path for recovery for that publication.

Part of the industry’s problem is loss of credibility. Too many times ideology has trumped facts. Even readers who agree with a publication’s point of view can feel that they’re being manipulated over being informed. Management of these declining media may not be able to control many factors in this internet era but this is one that they can.

There’s a lesson there for the internet publishing industry.

On another front, internet media needs a viable business plan. This plan should have 3 legs to earn revenue: 1) Reader support; 2) Advertising; and 3) Sponsorships. We can understand the last two legs but how to garner reader support? Getting readers to pay $ remains this industry’s biggest challenge.

HP Buys Palm

Hewlett Packard’s purchase of Palm for $5.70 per share should be a case study in corporate mergers. The bottom line question is this: Is Palm worth $1.2 billion?

Worth is more than just what’s left over after subtracting liabilities from assets. There’s the company’s prospects for the future. There’s the intangible of the worth of the workforce. In Palm’s case, neither of this appears to justify the price.

The company has posted $430 million in losses over the last 4 quarters. It has $202 million in cash (a $1.25 per share) but at the rate it is bleeding cash, even that is iffy.

The company’s smartphone business has dropped off and there does not appear to be solid prospects of recovery. As for the workforce, chief competitors such as Apple have been gaining.

Some observers place the worth of the company more near zero that $1.2 billion. Sieman’s and Motorola paid suitors to take their money-loosing cell phone operations off their hands. Will Hewlett Packard someday do the same?

Job Hunting in the Facebook Age

Some odd things are happening in the job hunting this year.

One applicant was rejected because after “friending” the manager on Facebook, the manager saw “a semi-nude picture” of him or her. Now, to be sure, people need to be circumspect on Facebook but what is “semi-nude”? - Wearing a swimsuit at the beach? - Shorts and a halter-top in the backyard?

A big no-no is to describe the job you’re applying for as “your dream job”. This means that you’re not sincere. - As in not honest. - As in, “get lost.” So, how can employers be so sure? Cannot applicants have more than one dream job? I’ve dreamt of being a movie star, of being President, of being a really rich writer. – And of being a CPA, too. Was I not being honest when I told employers that this was my dream job?

I saw that one financial services company requires all of its representatives to post nothing about finances on the internet. – Nothing?

Now, people do need to be circumspect on the internet. There’s way too much irresponsible behavior out there. All participants in the business world, employers, their employees, job applicants need to develop a mentality of acceptable conduct on the net which catches up to the technology.