New Opportunities to Manage Overhead Costs
McKinsey Quarterly just published an article titled “Managing Overhead Costs”. The message was clear. The high-tech had telecom industry is facing a prolonged period of extreme competition. This competitive pressure and the current economic conditions require business to implement a “new approach” to managing cost. Sustainable cost reduction should be targeted for the overhead functions i.e. finance, HR, IT and legal. Some interesting statistics were shared. From 230 S& P 500 companies that publicly announced cost reduction programs only 10% succeeded in maintaining their improvement in cost over 2 years. And only 25% of the companies expanded their business while improving their margins. One of the cost programs that produced sustainable cost savings over 3 years included IT Outsourcing.
As I read CIO Magazine, E-Week, and some of Gartner’s recent publications a common theme for 2008 is cost management. I support McKinsey’s focus on longer term programs, outsourcing as a vehicle, and targeting overhead functions because programs supported by process, metrics and contractual obligations tend to deliver sustainable results compared with episodic actions. Cost out initiatives are not new news to IT, Finance, Legal, and HR. However, there are new ways to find millions in savings in these areas; one new way is to outsource document processes related to these functions. Not only can you control cost but you can also look for new ways to expand your business. Here are some thought starters on Document Outsourcing.
