Saving Money in the Economic Downturn

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Saving Money in theEconomic Downturn
Infochange Conference 20 to 21 November 2008

• Ken Cole
• Projects and Practice Director

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What are your drivers to save money?

• Survival save money or go under
• You have been told to by someone else
• Exceeded your budget a localised event
• Less funding in the future if you are a public
  sector or funded organisation
• Anticipation things might get worse so better
  be ready
• Shareholder value to increase return on net
  assets etc
• Redeployment purposes no new money available
• That is what you do in an economic downturn
  according to the media
• A combination of the above?

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Knowledge is of two kinds we know a subject
ourselves, or we know where we can find
information upon it. Samuel Johnson
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Knowing your business metrics

• Where does the money go e.g. splits between
  people costs / bought in goods and service
• What impact will reducing costs have on the key
  services - and what are the associated risks
• What are your unit costs for key services
• What is the value and cost of your assets - do
  we know the real cost involved?
• What are the timescales for delivering the
  savings?

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Introducing the Top 10
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Health Warning

• There is no one size fits all do what is right
  for your organisation
• Different options will have different delivery
  timescales and associated risks
• In some instances you might have to spend money
  to save it
• Saving money is not the same as making cuts
• Managing cash flow is always a must

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10. Short Terms Deals for Commodities

• Multiple suppliers for many commodities
• Low risk of exposure if things dont work out
• Many suppliers in survival mode
• Quick to implement public sector have a vast
  choice of best deals to compare

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9. Shared Service Options

• Best in the public sector
• Multiple models including shared posts
• Options to withdraw from non-core activities and
  outsource to another body
• Potential for regional / sub-regional category
  management (Tesco model)

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8. Reduce service levels / specifications

• Lots of latency often built in to service levels
• Service levels often based on historic activity
• Can be quick to achieve, but needs to be balanced
  against damaging relationships

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7. Review Business Processes

• Many processes cost more to undertake than the
  value of what is delivered (e.g. invoices)
• Choice of operational models
• No damage to core services by making the change
• Needs significant cultural change to undertake

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6. Performance not conformance

• Allows suppliers to innovate
• Free consultancy
• Removes the tick box approach to competition
• Easier to measure the outcomes
• Better relationships (if managed)

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5. Market Shaping

• Working with partners for mutually beneficial
  outcomes
• Encouraging innovation, possibly by goal
  alignment
• Starting the band wagon not joining it
• Takes time and the right people

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4. Exploit your technology

• Technology is rarely used for the purpose it was
  intended
• 75 of implementations never deliver the numbers
  in the business case
• Dont expect the provider to tell you what to do
• Align technology to goals and objectives
• Never buy features

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3. Asset Audit

• Low on the list of priorities, but not
  necessarily expensive to do
• Linking assets with their support contracts/
  running costs
• Multiple databases and more than just a
  spreadsheet
• Linking assets with financial codes and suppliers
• Cashable savings of up to 30 of total
  expenditure have been recorded

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2. Outsourcing Audit of

• Contract scope and conditions
• Use of third party organisations
• Types of outsourcing used
• Costing models
• Benchmarks
• Return on investment yours and theirs
• Revisit the reasons for doing the outsource

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1. Negotiation with Suppliers

• Can be targeted to take advantage of the best
  opportunities
• Easier to remove costs before award under bid
  clarification
• Quick to set up
• Needs market intelligence and knowledge of
  relative position

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• The contour of the land is an aid to an army
  sizing up opponents to determine victory,
  assessing dangers and distances, is the proper
  course of action for military leaders. Those who
  do battle knowing these will win, those who do
  battle without knowing these will lose.
• The Art of War, Sun-Tzu

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Discussion and Questions

• Open Forum