3. Redesign process, governance and organisation models
Ensure systems, and the means to manage those systems, are in place in order to focus on an end-to-end approach to processes.
4. Move to global business services
Over the past few years, global business services have become an extremely popular way for businesses to manage and maintain their IT software solutions, rather than resourcing it internally or with smaller providers.
5. Build a common integrated technology and information architecture
Reduce IT, licensing and software costs by consolidating the technology platforms that the business requires to function, such as email, documents or homegrown applications.
6. Upgrade talent to support today’s new realities
Build a team of people with the skills and experience you need by creating a culture that fosters talent and excellence.
Timelines
Long-lasting and effective cost reductions require timelines, which, in turn, revolve around identifying priorities. KPMG ranks cost-savings strategies into three time-related areas: crisis management, tactical and strategic. Here’s an overview.
Crisis management (immediate)
- Stop all non-essential spend
- Rapid closure of loss-making businesses
Tactical (mid to short term)
- Discretionary spend reduction
- Outsource non-core businesses
- Eliminate business redundancies
- Operational efficiencies
- Spend management
Strategic (mid to long term)
- Outsource non-core services
- Joint ventures
- Key rationalisation methods
- Strategic divestiture
- Fundamental shift in business model
Teamwork
A team of people with diverse capabilities will preserve culture and morale during cost optimisation rollouts – particularly important in businesses that have already applied lean management and are looking to identify further cost savings.
Two final points to remember: don’t be intent on cost cutting at the expense of future profit windfalls (consider Apple, which continues to take on steep innovation costs during a period of sustained recession and successfully launched the iPhone5). And have several scenario plans for cost efficiency at the ready, so the business can adapt quickly as economic conditions change.
