Future State Now: A Business Technology Podcast

LiminalArc

Future State Now is LiminalArc's podcast on enterprise AI transformation. Each episode goes inside real client work: what's actually happening in the field, what's working, what isn't, and where AI is creating genuine value versus where it's just noise. Host Stacy Gordon talks with the people building these transformations day to day, turning hands-on experience into practical thinking for anyone leading large-scale, AI-driven change inside organizations.

  1. Oct 20 ·  Video

    EP 05: Value Engineering vs AI Cost Cutting

    When AI spending lands in the operating budget, the first thing many companies cut is people. This episode explains why that happens and what to do instead. Show Notes Why AI costs end up as headcount cuts: AI token spend is an operating expense, usually charged to IT, and labor is the easiest line to cut once capital and SaaS commitments are locked in. Cost myopia: cost is right in front of you, and value is further away. Leaders focus on cost because it's easier to control and because cause and effect between investment and value is hard to prove. Value engineering, explained: a practice that began at GE in the 1940s. It breaks a capability down into what its parts cost and the value each part produces. Value is benefits minus cost per unit of time. What chargebacks hide: centralized infrastructure costs left IT spend understated by 40–60%, until a corporate split forced every dollar to land in someone's budget. Avoiding the wrong investment: a value engineering analysis prevented a $20M platform spend and found that the real problem was back orders. Measuring what seems unmeasurable: if you find the right indicator, you can measure things that look intangible. Where to start: change is driven by pain more often than by vision. Fix what's in your control first, then deliver value in 90-day vertical slices that fund the next step. Key Moments  0:00 Cold open: measuring the unmeasurable 1:00 Why does AI cost cutting lead to layoffs instead of smarter IT budget decisions? AI spend, especially tokens, is an operating expense, and it usually lands in IT. Capital spend and SaaS contracts are locked in, so labor is the easiest line left to cut. The real problem is cost myopia: leaders manage the cost in front of them because value is harder to see and harder to prove. 11:23 What is value engineering, and how does it measure business value? It's a discipline that began at GE in the 1940s. You break a capability, process or value stream into what each part costs and the value it contributes. The basic test is simple: value is benefits minus cost per unit of time. 14:02 How do IT chargebacks and cost-only budgeting hide the true cost of technology? Chargebacks move costs around without tying them to value, so nobody owns the real number. In one company, chargebacks hid enough infrastructure spend that IT costs were understated by 40–60%. In another, a value engineering analysis stopped a $20M platform investment and pointed the money at the real problem, which was order fulfillment. 22:27 Can internal teams run a value engineering analysis and measure intangible benefits? Yes. These skills already exist in finance and engineering teams. Almost anything can be measured once you find the right indicator. 26:26 Will value engineering prevent AI-driven layoffs and improve AI ROI? Not on its own, but better math is better than no math. Financial models keep you from making the wrong cuts and the wrong investments, and they keep productivity gains from disappearing without ever turning into value. 30:32 How do leaders move from cost cutting to value-based decision making? Not by starting with culture, because culture is an effect, not a cause. Start where the pain is and fix what's in your own control first. Then deliver value in 90-day slices, and let each one fund the next. Follow Us On Social LinkedIn: https://www.linkedin.com/company/liminalarcgroup Facebook: https://www.facebook.com/liminalarcgroup Instagram: https://www.instagram.com/liminalarcgroup/ X: https://x.com/liminalarcgroup

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About

Future State Now is LiminalArc's podcast on enterprise AI transformation. Each episode goes inside real client work: what's actually happening in the field, what's working, what isn't, and where AI is creating genuine value versus where it's just noise. Host Stacy Gordon talks with the people building these transformations day to day, turning hands-on experience into practical thinking for anyone leading large-scale, AI-driven change inside organizations.

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