Daily Archives: December 4, 2008

Open Source & CIO Pays

We all know the economy is bad and we are in a recession for more than a year, but came to know about it just now, after the elections (almost as a conspiracy). And with so much meltdown there is an outcry on the CEOs pay, their way of reaching Washington for a bailout (flying corporate jets vs driving hybrid cars).

When discussing this CEO pay issue with friends, I thought that the reason that it will continue to be high and nothing can be done is because the stock holders, a major portion of them who are institutional investors like mutual and hedge fund managers probably don’t bother to care about restricting the CEOs pay because it’s going to come back and bite them when they take their hefty bonuses for the fund performance during the good years (and probably bad years as well which really upsets the common public myself whose retirement savings plummeted by half. But apparently, the real reason is that the shareholders in the US don’t have a say on the executive compensation like it is in the European countries where the ratio of salaries of rank and file employees to their executives is much lower than in the US. Hence, the “say on pay” proposition. Need to see where it goes.

Anyway, after following all this, when I recently read an article on how the companies are cutting their IT spend by adopting more and more open source, it got me thinking about the Open Source and the CIO pays.

Here is the thing. If you are a business owner and you find that you are paying 10 times more for the personnel to maintain the software than the licensing cost of the software, how would you feel? I mean, if a medium to large company uses a software like Oracle, SAP or Microsoft’s enterprise software, the cost of the software license and support is much more than the salaries of the people to manage those applications. But if the IT guys start using open source software and reduce one part of the equation, what happens to the other part? May be that’s when the CEOs will realize the extra overhead and move to SAAS and keep the IT staff to none or minimal?

Let me see, if a big company starts using SAAS for all of it’s IT requirements including email, collaboration and enterprise applications (ERP, CRM, HCM and Financials), then does it need a CIO and pay him a heft $250K salary or more?

Desperate times need desperate measures. As some political person said during the bailout discussions “the party is over”. The good for nothing and old style management should stop justifying their very existence and start embracing the new ways of doing business. It’s sometimes sickening to see a handful of people doing real work and more than double that number just introducing process after process, that seldom really works, to justify their job roles and compensation.

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Filed under Executive Compensation, open source, SAAS