Peter, being a technical kinda guy, also referred to the Flitzerboing-Ultra as FBU. He did this deliberately-partly to annoy the marketing guys, but mostly because he didn't see the point of wasting syllables or keystrokes. "We're not getting enough money in from our existing products. We don't have enough cash in our bank accounts, and the bosses are afraid we won't be able to pay our bills. They have given all contractors their obligatory notice, but no permanent staff have been laid off—so far. The financial guys are selling the buildings we work in, and then renting them back from the people they sold them to. Our Christmas party has been canceled this year, we're not getting paid bonuses, and they're canceling a whole lot of projects, including FBU." "So, it doesn't matter how much money FBU will bring in when it launches. If it takes money out of MegaCorp's bank accounts, then it's dangerous and has to be killed?" "That's it. There's even a rumor that the marketing guys will have to downgrade from first to business class whenever they fly. That's unheard of." "Thanks Peter," said Bob. He wasn't sure if Peter should have told him all that, but it helped. He hung up and composed a quick email to Billy explaining the situation.
There wasn't anything Bob could do about the state of the economy, so he went back to his work, updating design documents for a dead-duck project that was still, at least officially, quacking.
Cash Flow in More Detail
Later that day, after he had eaten his lunch, Bob spotted Sam coming back into the office. She dropped off her handbag at her desk and came straight to Bob. She crouched down beside him and said, "You know, I think I gave you the wrong answer this morning. MegaCorp want to cancel FBU because they don't have enough cash to pay for it."
Bob nodded. One of the things he liked about Sam is that she freely admitted when she had made a mistake. He didn't say he had figured it out himself.
"Let me explain," Sam said. "Imagine that the MegaCorp financial guys set up a special bank account for the FBU project. Now, I don't know their numbers, and some of the numbers are unknowable, but I can take a rough guess at them. If they don't cancel the project, then they'll have to keep paying us roughly half-a-million dollars each month for the next year before they launch the product and make some money." "Ah ha," Bob said.
In his vast experience, most twelve-month-long projects took eighteen months, but he said nothing. Much of the past six months had been taken up by changing the software so that it did what the customers wanted, not what they asked for. KillerWattSoftware made much of its money from those change requests.
"I imagine MegaCorp's other internal costs would be about the same," Sam said. "So, let's say that it costs a cool million a month to fund the project. That means they have to spend $12 million on this project before it goes live and they can sell the FBU product." "That's $12 million out of their special FBU bank account before they make any money. That's a big overdraft, Sam!" "Precisely! And right now, at a time when everyone is tightening belts, no one has that kind of cash available to spare."
Bob nodded. He grabbed a blank sheet of paper and a pen then drew a quick graph. He wrote "Bank Balance" on the Y axis and "Months" on the X axis, and then he drew a line showing the balance decreasing month to month for the next twelve months. He showed it to Sam.
She smiled and said, "You've got it. Now, let me show you what happens in month thirteen, when they start selling the FBU product."
She pulled her own pen from her jacket pocket and drew a line going up, up, and away at a surprisingly steep slope. It recrossed the X axis at month eighteen.