Bob Billington was upset. Bob worked for KillerWattSoftware. His job title was "senior designer," although he thought of himself as a really good programmer. He was good at his job, and he liked his job, but right now it looked like he might lose his job. At least, that's what Bob's boss, Sam, had said when she called Bob and the rest of the team into the conference room earlier that day.
"MegaCorp's management have given us formal notice that they are likely to cancel the Flitzerboing-Ultra project," Sam said. "Consumers are tightening their belts, global demand for Flitzerboings is down, down, down, and MegaCorp says that the Flitzerboing-Ultra project is no longer commercially viable."
She explained that the loss of this important project meant that KillerWattSoftware suddenly didn't have enough money coming in, and it risked financial ruin. Nothing was certain, she said, but it looked like they may have to "let some of you go." She then handed everyone an envelope, noting that the envelope was only a formality and no final decision had been made yet. She said she was sorry to be the bearer of such bad news and uncertainty and then terminated the meeting.
Bob felt sorry for Sam. He knew it wasn't nice to have to give such bad news, so he waited until everyone else had left the room. Then, when he and Sam were alone, he said, "Tough day."
"Yeah. Not much we can do about it, though, is there?" She opened her jacket and pointed to an envelope sticking out of the inside pocket. She shrugged. "We're all in the same boat."
Bob was disappointed by the news, but his two boys were adults now and they had left home, he had paid off his mortgage, and even though his retirement savings were invested in the stock market, he knew he had enough money to see him through any rough times, if he was careful. He knew that Sam had two young kids at home. He knew that she and her husband had just moved into a fancy new house. He also knew without being told that someone upstairs in the HR department had already started preparing a spreadsheet, which would be used to objectively figure out who would be the most expensive to "let go." Bob had worked here for fifteen years, got paid a lot, and was, he thought, irreplaceable—he knew the products, the code, where the skeletons were buried. Sam had worked here for three years, she didn't get paid nearly as much as Bob, and—not to put too fine a point on it—project managers were a dime a dozen. The math wasn't hard. Bob felt sorry for Sam.
Bob didn't know what to say, so he just said, "Yeah," and they walked out of the room together.
Sam went upstairs, and Bob went back to his desk, where he opened the envelope. It contained a letter from Eugene "Killer" Watt on formal letterhead, which told Bob nothing he hadn't already figured out: Expect that a formal announcement will be made in two weeks time.
Bob shrugged, but rather than turning to the job Web sites like he knew many of his younger colleagues were now doing, he fired up Google News. He sat there for half an hour, watching the headlines change as the Web site automatically refreshed every few minutes. He hoped a new headline would pop up saying that this whole recession thing was over. Nothing changed. Bob didn't expect it to.
He had been around long enough to recognize the pattern. There were always a number of good, prosperous years when the stock market slowly rose up, up, and away, until suddenly, out of the blue, it crashed back down. Everyone expressed surprise, shock, and horror. The media talked about little else. House prices dropped, unemployment went up. Then, slowly, things got better. The stock market slowly rose up, up, and away. This went on for a few more years, the world got prosperous again, and then suddenly, out of the blue …
Bob closed his browser window and fired up his email client. He had loads of work to do. Sam had said that, officially, the Flitzerboing-Ultra project was still active until they heard otherwise. Bob opened up an email from Peter Prince, a designer at MegaCorp. He did much the same job as Bob, and they had worked together, off and on, for the past four years. More recently, Peter and Bob had gone back and forth a lot, working out the specifications of the Flitzerboing-Ultra software.
Peter had sent the email late the previous evening, answering some—but not all—of Bob's questions. He promised to send the remaining answers later in the week. That was fine with Bob, because the important questions had been answered and he could get on with his own work.
Bob reread the email and realized that when he wrote it, Peter had no idea that the project was going to be cancelled. Had Peter and his workmates just been given a bunch of envelopes, too? Bob knew that Peter would be very upset by the news, because he was looking forward to buying the Flitzerboing-Ultra for his granny as a gift for her on her ninety-ninth birthday. Perhaps, Bob thought, the economy might pick up sooner rather than later, and she might get it for her hundreth birthday.
Why are MegaCorp Canceling the Project?
Sam walked by. Bob called her over.
"Sam, Explain to me again why MegaCorp can't afford to pay us to build the FBU."
Being of a technical disposition, Bob and his team referred to the Flitzerboing-Ultra by the initials FBU. Sam did too, but only when she was talking with her team. She always used the full name when talking with MegaCorp people—they took things like that very seriously. She had heard a rumor that MegaCorp had paid an upmarket marketing agency over $150,000 to come up with the name Flitzerboing-Ultra. Considering that the Flitzerboing series had been around for a dozen years, one hundred and fifty grand seemed a lot just for adding the word Ultra.
"It's all about money: revenue and cost," she replied. "Businesses and consumers are worried about money, so they're tightening their belts, spending less. FBU isn't the sort of product people buy when they're tightening their belts. MegaCorp believe that sales—revenue—across the entire Flitzerboing product range will drop by between 25 and 50 percent. That's a big hit."
Bob thought about what Sam said. What applied to MegaCorp also applied to KillerWattSoftware. FBU represented, what, a quarter of KillerWattSoftware's revenue for the forthcoming year? If many more projects were cancelled, the company could fold.
"Yikes," he said.
"Yikes indeed," agreed Sam.
"Well, couldn't we charge them a little less for our work? KillerWattSoftware may not make as much money from the deal, but at least we'd save the project, earn some money, and perhaps save a few jobs."
"Our account manager tried to negotiate with MegaCorp. Apparently, we offered them a 20 percent reduction, but the MegaCorp guys just laughed. They said that represented only a tiny drop in their ocean of troubles."
Bob raised an eyebrow. Twenty percent sounded like a good discount to him, but what did he know about such things? He reminded himself that he was a programmer not a businessman.
"Can't MegaCorp just drop their prices? They might earn more money if the price were lower and more people bought it," Bob said.
"I guess they could … but pricing is a tricky thing. They might make more by lowering the price; they might make less. Seriously! It's not so straightforward. Besides, if they drop their prices, then so will their competitors. They could end up starting a price war, which no one except the consumer wants."
Bob nodded. The folk at MegaCorp were good businesspeople. He was sure they had thought about these options. At the end of the day, it wasn't up to a bunch of computer programmers to suggest to well-seasoned business people how to run their businesses.
"So, MegaCorp reckon they can't make enough money from the FBU project, and therefore we will probably lose our jobs," he said.
Sam said, "Yeah," and wandered off. She had a Gantt chart to polish.
Find out if MegaCorp dropped its prices and if Bob and Sam lost their jobs in Part 2.