Our exponentially increasing costs (was Re: [Foundation-l] Re: Answers.com and Wikimedia Foundation to Form New Partnership)

[Anthony DiPierro]

On 10/23/05, Daniel Mayer <maveric149 at yahoo.com> wrote:
>
> --- Anthony DiPierro <wikilegal at inbox.org> wrote:
> > You know, those figures would make a lot more sense if they were done on
> an
> > accrual basis rather than a cash basis. As is the figures completely
> ignore
> > the fact that the expected life of the servers is more than a single
> > quarter.
>
> The figures I gave assume that all the hardware we have already bought is
> still
> in operation (which surprisingly is more or less the case).


What I'm saying is that the hardware you buy today is both a current expense
and an investment in the future. The budget figures make it look like it's
solely a current expense.

> If you're using those cash-basis figures that's another problem with the
> > model as well :).
>
> Yet the model has closely predicted increased costs for the last year
> (yeah, to
> an extent this is self-fulfilling, but only so much so)...
>
> -- mav


The exponential growth has probably to a large extent made the previously
bought hardware negligible, though this will become less and less so as time
goes on (even if growth doesn't slow). Along the same lines as the costs
being largely self-fulfilling (whatever is allocated in the budget, that's
what's going to be spent), I've personally noticed a fairly steadily
increasing reliability in the system in the past 9 months or so. I believe
it was less than a year ago that Wikipedia wasn't even able to enable search
the vast majority of the time. The site is still fairly flaky, but a lot
less than it was a year ago.

Anyway, I haven't looked that closely at your model and maybe you've figured
out a way to capture this in some other way, or maybe it's just a
coincidence that it's worked so far. How many quarters have you actually
made predictions using this model (actual predictions, not backing into
historical data after the fact)?

If you'd prefer I take this conversation off-list I can do that. I'm not
trying to criticise, just make some helpful suggestions; preparing financial
statements on a GAAP basis is a large part of what I currently do for a
living, after all. The [[Wikimedia Budget]] page mentioned that "The
Wikimedia budget has to follow Generally Accepted Accounting Principles
(GAAP) for Not-for-Profit Organizations", and GAAP requires statements be
made on an accrual basis. Even if you're going to ignore this and use a cash
basis, you should at least use a modified cash basis which factors in things
like depreciation.

Anthony