Prevent These 5 Mainframe COBOL Cost Reduction Project Mistakes
Content
- Risks of cutting costs
- Know the company
- One Solution, From One Company
- Manufacturing Business News: Are You Aware of Cobots? Ammonia Production in Louisiana and Other Headlines
- Use Open-Source Software
- Drive stronger performance on your mission-critical priorities.
- Cutting Costs the Wrong Way Can Damage Your Brand
It had looked at expenses across the board, scouring each SG&A line item looking for efficiencies. From travel and procurement to HR and IT to core business services, the company sought savings. If you are hunting for savings of 30% or more, you may have to challenge even the most sacred of cows—and you may be pleasantly surprised at the outcome.
IT leaders often overreact to a budget reducing mandate by swinging an overly broad ax. To align with orders from the top, many IT leaders take a “one size fits all” approach for cutting costs, observes Ramesh Balakrishnan, a senior manager at IT and business advisory firm EY Consulting. Another example of imprudent cost-cutting is slashing data center budgets as an organization moves to the cloud. “On the surface it makes sense, but the economics of IT are constantly evolving, and moving to the cloud doesn’t necessarily mean it makes financial sense to make data center cuts in a reactionary way,” Paravattil says. He believes that the best way to ensure fully informed decision-making is for IT leaders to do the upfront work, using multiple data sources to validate budget cuts. Cost reductions can be achieved by not spending on certain things, but they can also be achieved by revising all of your company’s processes.
For Chief Information Officers , the dilemma lies in reducing costs without disrupting operations over the mid to long term. Organizations must have a well-defined and planned approach to cost optimization and control to ensure business continuity. Effective business transformation starts with a cost-cutting strategy.
- If you can’t reach your savings target through the actions described above, you will have to take the painful step of recommending that entire tasks or programs conducted by your department be cut.
- If you’re looking for ways to reduce costs and improve efficiency in your organization, you’re in luck.
- Because of the premium many organizations and their investors place on top-line growth, executive leaders tend to have a blindspot when it comes to complexity.
- For example, due to the carelessness of employees, the sample is printed before acceptance of the customer is reached.
Apps like Connecteam and Toggl can track employee working hours and the time spent on jobs/projects. To ensure you’re cutting business costs, try as many as possible to see what works and doesn’t work for you. We’ve put together 13 easy tips to help you reduce business costs. Reducing business costs doesn’t have to be time-consuming or take too much thought.
Risks of cutting costs
Many staff functions involve reviewing and reconciling information supplied from a decentralized field operation. Usually, these positions hark back to a time when there were many errors in the data or wide variances from expectations. Even as errors decrease and expectations are more routinely met, most companies continue to devote resources to checking 100% of the data 100% of the time. Consider eliminating the review entirely, conducting it less frequently, or checking just those units with a history of supplying bad data. One fast-food client required daily reconciliations of the cash balances of every one of its 600 stores, even though 99% of them had not had an error in more than a year.
Automation programs increase the speed of these processes, can be run outside of business hours and also reduce the risk of human error, and such mistakes can potentially be very costly to a business. Whilst there are some benefits to having a full inventory, such as quicker turnaround times on orders, holding excess stock could actually be costing you money because it ties up your cash flow. If the stock you’re holding is surplus to requirements, cost reduction strategies then you will also be spending unnecessary money on storage costs. Taking the time to plan, strategize, and execute a cost-cutting plan does pay off. For example, finding the best, if not the most cost-effective option, requires a significant investment in time spent on research and analysis. IT leaders can identify opportunities to economize on expenses on most software licenses, but only if they take the time to look them over.
Know the company
Many companies, De Alwis said, see staff reduction or cuts to training budgets as the quickest way to cut costs. But she stresses that companies need to take a more strategic view of exactly who or what they cut. Inefficiencies in the supply chain cost money, so identifying these problems and rectifying them is crucial if you’re looking to reduce costs.
We recently found a way for a company to save more than $600,000 a year just by eliminating coordinators between HR and other departments in the same building. Coordinators were valuable to departments whose operations were spread around the country but less so to those nearby. It is rarely possible to achieve cost reductions of 20% unless you remove a significant portion of the work content from the department.
Leveraging AI, bots can do everything from extracting data to moving files and folders. They can even interpret text, engage in conversations, and understand unstructured data. With RPA, you can reduce the time spent on menial tasks, giving your staff more time to focus on vendor relationships or value add activities. Even better, you can train your team to become citizen developers . With citizen developers, you can cut IT costs without sacrificing quality.
It’s important to know what kind of change the company wants to achieve — whether it is a light dusting or a deep cleaning — and how employees will react to each level of change. Tactical and strategic changes to the operating model can produce success initially, but to produce sustainable value, companies need to apply a cultural lens to decision-making. They need to understand the cultural fabric of their organization and make decisions that offer the best fit. To cut 30% or more, pursue cross-department and program-elimination ideas.
One way to gauge employee support is to conduct interviews and workshops. The more interactive the process is, the more employees will understand and embrace the company’s goals. As mainframe costs continue to rise, alternate compute and execution environments such as the zIIP, Linux, and the cloud are gaining more attention and credibility. The prevention of the dimes-for-dollars mistake is based on two elements. The first is to understand the conditions that must be met to retire the legacy system and remove its cost.
One Solution, From One Company
These departments conduct analyses to develop insights that can lead to better decision making. They usually find it difficult to systematically reduce costs, because they don’t have stable routines driving their activities. CIOs who pass the cost-cutting buck to subordinates risk getting less than what they bargained for. Meanwhile, the IT program management leader opts to trim operations by 10% to 15%, shortchanging the new methods or tools desperately needed to improve productivity. There’s more to cutting costs than leaving the creamer out of the break room.
You want to ensure you’re being frugal with your resources while not eliminating the essentials. The quality of the coffee served to your employees and clients, the quality of the napkins, plastic cups and even the toilet paper are things that can be reviewed. However, it’s not advisable to waste precious time in managing spending that is not important for your business. Besides makes your employees and clients dissatisfied, it won’t offer you great savings, and you’ll be spending your time making an effort that could be better spent elsewhere. Eliminate mistakes, quality issues, and new product delays with a cloud-based single source of truth. Arena’s product lifecycle and quality management solutions enable you to bring high-quality products to market fast.
Manufacturing Business News: Are You Aware of Cobots? Ammonia Production in Louisiana and Other Headlines
Do you prepare long reports with comprehensive data when only exceptions matter or when the true consequences of variances are quite small? Do you prepare reports that cover short periods of time or are delivered in real time, when longer periods or slower reporting would meet the need just as well? What was worse, a senior executive’s assistant recognized that the reports were no longer useful, so she had stopped giving them to her boss. And since she had no knowledge of the effort required to create them, she had not notified the reports’ originators. Overhead that increases the effectiveness of your direct activities should be evaluated against a strict cost/benefit standard.
It’s never a good idea to attempt to do the same work with 20% fewer people. They tend to consider supervisors and the number of people reporting to each—spans of control—at the beginning of the review process, when it’s easy to conclude that big changes are impossible. That’s because heads of staff functions are viewed as needing subject-matter expertise in the areas they oversee. This makes for narrow spans of control, especially when subordinates are doing distinct, specialized tasks. First, forget about finding a single idea that would radically change the cost structure of your organization or department, thereby solving your problem in one go.
If this is something you’ve been planning for awhile, now is the time to do it. Call in managers and supervisors to discuss what can be revised or restructured. Production, administrative and client service processes can all be revised, resulting https://globalcloudteam.com/ in higher quality and lower spending for your company. Many executive leaders will need to make trade-offs in their spending to tackle today’s triple squeeze of persistent inflation, supply chain disruptions and a tight labor market.
Across-the-board cuts penalize the more efficient parts of your organization and can result in eroding important sources of value. Be ready with productive options when your CFO asks for cost reductions. Too much cost-cutting can make staff weary and affect morale and internal communication, so CFOs must take care. Rathindran also suggested using multi-year revenue and cost targets, which can compel investors to focus on longer-term horizons rather than short-term performance. Companies have already fallen into the trap of rushing cost cuts in the latest downturn, said Paul Gardner, ACMA, CGMA, the CEO and CFO of Fresh Accounting, based in Hong Kong and Singapore. In a deepening crisis, management accountants need discipline to avoid hasty mistakes that could damage their business.
Use Open-Source Software
Many IT leaders are accustomed to cutting costs in areas that don’t have a return on investment. Cybersecurity is many times a victim of budget cuts due to the inability of leaders to prove the ROI, which is not seen unless an incident occurs. If your personnel costs are suffocating your finances at a time of crisis, you should know that laying off staff could be disastrous for your company in the short-term.
And the last thing you want to do is go through each form manually. Boost your social media presence by choosing the right platform for you. In fact, 82% of all businesses fail because of cash flow problems. Historically, managers were evaluated against the no-surprises standard. However, by rewarding managers for protecting against low-probability, low-consequence events, this standard has predictably produced excess costs. Do the routine 90% of items cost much less to handle than the exceptional 10%?
Drive stronger performance on your mission-critical priorities.
This leads to faster application development and more business agility. As a result, you can build the apps you need and connect them to your existing systems at a fraction of the cost of traditional, custom app builds. By doing this, you’ll be able to scale your systems to support your growing business without burning through your budget on IT resources. On average, organizations spend 15% of their time in meetings, 37% of which are meaningless. Meetings should be short, only involve key players, and have a strategic goal. And use other channels like presentations, email, and memos to share information.
Align decisions to the business strategy
Organizations and departments trying to cut administrative costs often leave management untouched—missing out on big potential savings. When organizations do pursue growth opportunities, fewer than one in 10 create enough capacity to ensure success. Being conservative with new bets may appear prudent in times of crisis, but will often damage the organization’s long-term overall performance.
Cutting Costs the Wrong Way Can Damage Your Brand
Your reputation is in many ways your most valuable asset because it’s the only one that your competitors can’t copy. In our service-oriented market your reputation is what sets you apart, for better or for worse. Rather than get tangled up in business expense reduction, you need to work with a team that can leverage experience gained in multiple channels to help you avoid expensive mistakes and reduce waste quickly.
At one professional-services firm, such an audit significantly reduced the time that its busiest and most valuable employees spent in meetings, thus increasing their productive hours by 20%. You’re unlikely to find cost savings of 30% or more of your existing budget by looking solely within your department. However, you’ll be surprised at what you can accomplish by investigating how well the work of your department fits with that of the others. (An organization can be inefficient in total even if each group within it is efficient.) So if your goal is 30% or more, you must think more broadly.