Economic conditions are very difficult for most businesses right now. And the pressure from Finance is always ‘can you do more with less’. If we put headcount reductions aside for a moment, the key surely is to find ways of achieving more with less budget, not doing more. So here are three ways that I see some of Silver Bullet Associates’ clients tackling this thorny issue.

1/ Leverage your current infrastructure. Make the most out of what you’ve got. Don’t rush to upgrade if you don’t need to. Review your asset register to see if you’re paying for things you no longer need or whether you can defer additional acquisitions if you have spare assets un-used in another part of the business.

2/ Renegotiate current contracts. Don’t simply let annual renewals happen but check the contract still accurately reflects your actual product usage; if it doesn’t, ask for a reduction. Challenge all your suppliers to come up with creative ideas that result in a net reduction in their annual support and maintenance costs. For example, if you have a core product that you’ll still be using in 3 years time, why not switch your annual renewal contract for a new 3 year fixed price deal at a lower annual cost? It’s good for you and good for your supplier as they get a term extension and a revenue lock-in for a longer period.   

3/ Wait for the best deal. Suppliers sales pipelines have really thinned out this year, so any deal still on the table has become even more precious. Find out when their financial year end is and use it to your best advantage.

Yesterday I had lunch with a CIO of a large London based business. He was pleased with some recent savings Silver Bullet Associates had helped him obtain during a negotiation with a large database vendor and had been in touch with a business colleague in another firm to recommend my services. He was surprised to be knocked back with a comment that ‘we don’t want his sort in here’. In asking for clarification, it soon became apparent that ‘cost reduction’ had become a four letter word in his colleagues’ business after a large well known IT consultancy company had recently promised the earth and delivered nothing but a huge bill of their own. Unfortunately, this happens more often than you might think as many buisnesses get embarassed when expensive consultants fail to deliver cost reductions and so cover up the  short-fall with bluster about ’uncovering intangibles and adding value to internal processes’ etc. At the end of the day, the only real measurable is how much cost was reduced or saved. So yes, maybe cost reduction can be a four letter word, so long as the word is ‘save’.