Saving Money in the Economic Downturn Ken Cole Projects and Practice Director Infochange Conference 20 to 21 November 2008.

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Presentation transcript:

Saving Money in the Economic Downturn Ken Cole Projects and Practice Director Infochange Conference 20 to 21 November 2008

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?

“Knowledge is of two kinds: we know a subject ourselves, or we know where we can find information upon it.” Samuel Johnson

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?

Introducing the Top 10

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

10. Short Terms Deals for Commodities Multiple suppliers for many commodities Low risk of exposure if things don’t work out Many suppliers in survival mode Quick to implement – public sector have a vast choice of best deals to compare

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)

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

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

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)

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

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 Don’t expect the provider to tell you what to do Align technology to goals and objectives Never buy features

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

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

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

“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

Discussion and Questions Open Forum