The $500k Laptop: Hidden Costs of Ineffective Decision-Making

The $500k Laptop: Hidden Costs of Ineffective Decision-Making
November 26, 2012 Anne Wade

This is the second article in a series on the topic of decision-making. You can read the first one here.

“I didn’t think this situation could get any worse,” said my buddy on the other end of the phone, “but guess what I just found out, the fallout is huge.”

My buddy’s story begins last year when he, an IT subcontractor, did a long-term assignment for a software company. He was approached with the project when the company realized their internal software was too outdated to support a new client’s systems’ requirements. They didn’t want to lose the contract, so they hired him with the understanding that not only would he build the systems using more modern software, he would train a small group of in-house programmers along the way.

He was suddenly let go after working on this project for several months. A Vice President – with whom he had never met – explained the project was running over budget, and as a cost cutting measure, the work was going to be transferred to in-house staff. The VP went on to say it was important that the firm build an effective transition, so the Project Manager would be calling very soon for a debriefing. Under watchful eye of another employee, he was escorted back to his desk, where he picked up his belongings and left.

When we first spoke, my buddy said it wasn’t the sudden termination that was bothering him so much – stuff happens – rather the phone call he received a week later. It was an Admin Assistant asking where his files were located. He told her everything was stored in the company’s laptop sitting on the desk he used to occupy. He suggested she stop by to retrieve it and also asked when the Project Manager would be calling as he was on his way out of town for another assignment. She said not to worry; she would go pick up the laptop right away and stop by the PM’s office to arrange a conference call.

A day later she called back. It was not good news. Tech Support had erased his laptop an hour after he left the building. And the Project Manager wouldn’t be calling back; he had quit. Apparently, he was on vacation when the terminations took place and hadn’t been consulted ahead of time. When he got back to the office and learned of the lack of coordination and poor decision-making – it had not been the first case – he walked out.

The IT subcontractor had all of his files stored on the laptop that had been seized – 2.6 million lines of new source code, rating calculations and compliance data for 50 states and a series of work-arounds bridging two leased software products. Obviously, little thought was given to how a single termination would effect the project and the company’s bottom line. And by letting a valuable team member go without the proper debriefing, the entire project came to a screeching and costly halt. This company was left back at square one with no code and no one to even begin to figure out what had already been done.

All because of some terrible decision-making, the company had to hire yet another subcontractor to learn and redevelop the language. The company predicts it will take at least another year to complete just two of the five systems to needed to operate the client’s product. And the costs, to-date, are in excess of a half million dollars and are still growing. More importantly, the client has filed suit for breach of contract. Rumor has it, they are asking for $20m plus.

This is terrifyingly good example of making decisions in a vacuum, never bothering to understand the effect of what can happen when the right side doesn’t know what the left side is doing.

How can you avoid decision-making pitfalls like this in your business?

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