Understanding IBM

Part 19. Bean Counters

The term "bean counter" is used in an almost cynical way to describe accountants. Accounting, like economics, is considered a "boring" science, something sure to cure insomnia, something that only a dull and boring person would like. But whatever we may personally think about accountants and accounting, they are vital to the success of a big business. Let's look at a few examples to see why that is.

If one person runs a store, they are trying to sell a product or a service at a profit. Perhaps they are manufacturing PCs, in which case they have costs of assembly, costs of physical product, distribution and marketing costs, and overhead. If this one-person shop is assembling twenty PCs per month, then they can overlook some things -- for example, the cost of screws. Let's say that the cost of spare screws is zero because they can keep a tray of spares sitting near their workbench. That's one less thing to worry about.

On the other hand, a major corporation assembling one million PCs per month doesn't have just a tray of leftover screws. They need perhaps 40 million screws per month. If each worker throws away the spare screws from an assembly, they are throwing away *individually* perhaps twenty cents worth of screws for each PC. But multiply that times one million PCs and you have the tidy sum of $200,000 per month for lost screws!! You can see how "bean counters" could prove useful here: it's obviously now important to build trays to hold screws, to verify that the workers don't waste any leftover parts such as screws, plastic bay covers, metal brackets, and other "throwaway" components.

Another example involves assembly time. Suppose a single worker can load one operating system in twenty minutes, but another operating system takes forty minutes. If the physical assembly takes twenty minutes by a skilled technician using prefabbed components, then the additional O.S. loading time would mean 50% more assembly time per PC. For a small shop to spend an extra twenty minutes per PC times twenty PCs per month means just 400 minutes per month, or less than seven extra hours per month. However, the major corporation must hire 50% more assemblers, thus paying 50% more in wages, benefits, workspace, training, and other costs. No matter how superior the forty-minute O.S. is, it will be *very* hard to justify this to the bean counters.

Therefore, as an enterprise grows in size, there are certain issues of "economy of scale" that the small company can basically ignore without peril. But as PCs have become a commodity business, the little things mean a lot. Thinking about making these economies of scale work in favor of your favorite O.S. might be a very effective antidote for the rule of the bean counters.

Most recent revision: March 21, 1998
Copyright © 1998, Tom Nadeau
All Rights Reserved.