Siemens to cut IT budget by $1 billion

[Renew Deal]

German manufacturer embarks on three-year plan to lower IT expenditure, increase efficiency

By John Blau, IDG News Service January 28, 2004

German electronics and engineering conglomerate Siemens AG has embarked on a program to standardize business applications and consolidate computing infrastructure across its worldwide operations in a move to lower IT expenditure and increase efficiency.

The Munich-based equipment manufacturer plans to cut its current IT budget of around €3.7 billion ($4.7 billion) by €800 million ($1 billion) over the next three years, said Edmundo Ruiz, vice president of corporate information and operations groups at Siemens, in an interview this week on the sidelines of the Strategic IT Management conference in Neuss, Germany.

Under the program developed in part by The Boston Consulting Group, Siemens is studying which business applications and hardware devices have a level of "commonality" across the company and which still have a level of "uniqueness." The aim is to achieve as high a level of commonality as possible in order to lower the number of different software applications and hardware devices used in the company and the vendors supplying both, according to Ruiz.

Wireless LAN (WLAN) systems, for instance, have a low level of uniqueness, Ruiz said, noting that these systems are standardized and available at commodity prices. Many business applications, on the other hand, have a high level of uniqueness, requiring ERP (enterprise resource planning) standardization, which takes time and costs money, he said.
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http://www.infoworld.com/article/04/01/28/HNsiemensbudget_1.html

[Sapphocrat]

1. This has been coming for some time...

Siemens bought a company where I worked for four years... Current and former employees have been keeping me updated on how Siemens has been gutting IT, worldwide -- outsourcing & centralizing internal "support" until "support" is utterly meaningless.

In early 2003, Siemens announced a series of "tiered" layoffs for this company: As it was explained to me, the employees were divided into 3 groups; the first group was canned 6 or 8 months ago, the second were shown the door later last year, and the last group is out of there come December, 2004.

The only good thing about it is that at least the employees were told up front when they could expect their pink slips.

I don't know the final number of layoffs for this particular company, but this round of layoffs is not limited to IT; it cuts across all departments.

To paraphrase Rev. Niemoller, First they came for the help-desk techs, Then they came for desktop support, Then they came for the network administrators... And by the time they came for Marketing and Accounting...

You want to know what's really sad? This company is an "old-timer" by Silicon Valley standards, founded over 30 years ago, and was an all-American, completely independent high-tech manufacturer in a field where we employees truly felt we were working for "a higher good." Before selling out to Siemens, it never once laid off a single employee, even through the worst of times. They cut back hours, shut down for a week here and there, but remained dedicated to serving their employees as well as their stockholders.

Guess none of that matters anymore. Guess someday we'll be telling our disbelieving grandchildren tall tales of companies that actually took care of their people.

[modrepub]

2. My wife won't be happy

She works for Siemans too. By the way, did you work for a company with the initials SMS? A layoff for her would throw a nice monkey wrench into our lives. She's been with the company for almost 15 years now. Oh well, the stock price is sure to go up on this news!!! If she had only bought stock when it was at $4 a share....