The details of the reorganization are becoming clear. Several points are not favorable.
First, the government services and product lines of business now seem to have merged accounting. Managers in this business know that services are managed by percentage of billable hours, while products are managed by units shipped. To confuse these is to reduce effectiveness in both types of organization. Government services are even more specialized, and capture management is paramount with long, complex sales cycles.
This reorg is said to involve creating several cost centers, wet dreams for techies, not directly coupled to business units of either type. Capital investment in product will be blurred with the IR&D allowed under government accounting for integrators, a support function for capture management. These kinds of mixed cost centers are usually a poor idea run by academics or those who otherwise are unacquainted with managing P&L. Excessive overhead results, then the R&D gets cut, and by the time the dust settles the company has lost ground in the market.
Intergraph has not had a class of corporate level marketers who connect opportunities with people who solve specific problem types and with business unit sales people. It has lacked a supporting technologist group for those corporate marketers as well. The reorg does not seem to invest heavily in these areas either.
I say keep your money. If you are an analyst pressure these guys to get real: no new cost centers, invest in corporate marketers, give control to business units to meet numbers within the business model that works for their business. The present course will probably not control costs and produce new growth as the CEO promises. |
