Tag Archives: cost savings

IT managers can put a cost on anything

One of the difficulties we have as IT managers is in communicating with business managers.

–  We are technical, , ,  they are not.
–  We speak in technical terms, , , they do not.
–  We understand the technology, , , they do not.
–  They discuss things in financial terms, , , we do not.
–  They understand their business, , , we do not.

It’s material for a big gap to develop and prevent us from getting on the same page with our client.

One of the things we can do is learn to discuss things in financial terms. Are you aware, it’s possible for you to put a cost on virtually anything? Well you can, , , and you need to. Here’s why.

Business managers speak in financial terms, , , especially senior managers like your CEO and CFO. They mentally convert most things they hear into either business value, business cost, or business risk. All three of these have financial implications.

Let’s look at typical examples:

  1. Cost of downtime  –  Downtime is certainly a risk and a cost to your company. Are you aware you can literally identify the cost impact of a printer going down, a router failing, or a server crashing? Need to upgrade your infrastructure? Conveying your strategy in “cost of downtime” can be a big help when you discuss this with your senior manager. CLICK HERE to learn how easy this is and use a tool I developed for this purpose.
  2. Cost of losing a client  –  Here, I’m talking about your company losing a paying client, , , someone who buys your company’s products or services. Any good marketing or sales manager can tell you what losing a client is worth, , , in financial terms. If you have an IT initiative targeted to help your internal marketing or sales client improve client satisfaction, , , they should be able to help you identify what your work value will be in helping “keep clients”. It’s always cheaper to keep a client than to lose one and have to replace him.
  3. Business opportunities – Projects that help the company sell more widgets or services, , , or add clients have a definite financial value. Your marketing and sales teams always forecasts future sales, , , seek their help in identifying worthwhile projects that help them succeed and in outlining the opportunity value your IT project work adds to the mix.
  4. Cost avoidance  –  Doing a project now can avoid costs down the road. Don’t forget to include this aspect when looking at the financial value of your project.
  5. Productivity savings  –  Improving productivity of the company’s workforce can be a big financial value. Improved productivity lets a department do more work without hiring more staff or the ability to reduce staff to do the same amount of work. The department managers and their bosses can help you determine the financial value of improving productivity. For example, in one company every time we developed a data interface from a hospital system into our systems we knew it would be the equivalent of one full-time equivalent (FTE). As a result, our operations people wanted as many interfaces programmed as possible because it eliminated clerical workers having to key in data and handle paper, , ,  big help in improving their financial position. Identifying the financial value in this case is simply the cost of a clerical worker in salary and benefits.

Talk in financial terms and business managers hear you, , , speak in technical terms and use all the acronyms we like to throw around in the IT world and they not only do not hear you, , , they don’t want to meet with you because they simply can’t understand what you are saying.

Make your discussions conversational and put things into financial perspectives and see what a difference it makes with senior managers.

Get rid of the paper

If your company processes lots of paper, you probably have a big opportunity for cost savings. Paper is one of the first places to look at when you want to find potential cost savings.

Why?  Because paper offers so many cost saving possibilities, such as:

  • printing cost (paper, ink, and supplies)
  • cost of printers (hardware and maintenance)
  • special forms creation cost
  • paper handling cost
  • distribution cost (postage, shipping materials and people productivity)
  • processing time (there is a cost tied to the time required to deliver the paper)
  • paper storage cost

Find big pockets of paper in your company and you may have the ability to reduce costs in several ways.

Often, it requires technology to eliminate paper and that’s where we come in. Here are some of the technical solutions to help you eliminate paper:

  • software applications
  • scanning and imaging
  • programming data interfaces
  • creating digital files rather than paper documents and reports
  • , , , even using duplex printers to print on both sides of the paper

Ask your clients and yourself a question, “Is this report or document actually needed, , , or would a digital file be just as effective?”

I’ve run little tests at times by stopping a report that we questioned was actually needed or used. Be sure you have senior management support when you do this to prevent problems. Often, you find no one notices, , , if they do and they need the report, they ask about it.

Look in your desk and file cabinets. How much of the paper that’s in there has been accessed in the past 12 months? Probably very little of it. Wouldn’t it be much better if all of this information were in digital files which would be much more accessible and require so much less space to store?

Getting the idea?

Be creative and look for ways to reduce or eliminate paper. Your company will benefit tremendously.

 

10 ways to eliminate paper and incur BIG cost savings

The cost of paper is enormous in most companies. Anytime, you can find big pockets of paper usage, you generally have an opportunity to save your company thousands of dollars, if not millions.

Eliminating the use of paper reduces expenses in your company in many ways:

  • paper
  • ink & ribbons
  • printers
  • handling
  • distribution
  • storage

Paper and ink costs can be significant, but creating the paper is only a fraction of the cost of using paper. Handling, distribution, and storage costs are far bigger issues.

Things to consider:

  • Xerox research estimates each US worker creates 10-12 thousand sheets of paper a year.
  • US paper consumption has tripled in the last decade to 700 billion sheets a year. (Source: Xerox research)
  • Life cycle cost of a piece of paper is estimated to be $20.00. (Source: Association for Information & Image Management.)
  • In the 1990’s, insurance companies used to pay our company $1.00 for each insurance claim we sent them electronically versus paper. In those days, insurance companies estimated the cost to process a single paper claim was $5.00.
  • In 2006, the use of electronic claims has grown significantly but so has the number of total claims, , , paper is still heavily used even though electronic claims now make up about 75% of all claims submitted. The cost to process a paper claim is still between $1.50 – $3.00, , , and sometimes much more. (Source: AHIP – America’s Health Insurance Plans)

In an age of digital information, you would think paper usage would be declining, but it isn’t, , , it’s increasing rapidly according to research findings by Xerox. If the research is accurate, here are some startling numbers for a small company of just 100 employees:

  • 100 employees create 1,100,000 pieces of paper annually
  • 1,100,000 pieces of paper have a life cycle cost of $22,000,000

That’s creating $22,000,000 in cost every year. Not all of this cost is incurred by the company creating the paper, , , much of the cost is incurred by other companies who must handle, process, and store the paper created by our small company of just 100 employees.

Think of the thousands of companies, with tens of thousands of workers and you can quickly see that the cost of paper and associated costs in handling, distributing, and storing it are enormous.

With today’s technology, there is no reason we can’t reduce paper significantly. We won’t eliminate paper totally, but we certainly should be trying to reduce the creation of paper and the associated costs to our company.

As a new CIO in a company, one of the things I look for in my initial assessment is for large “pockets” of paper. If I find large amounts of paper in a department of the company, there are generally some major cost saving opportunities in the following areas:

  • reduce clerical workers who handle and process paper
  • reduce postage and distribution costs
  • reduce paper storage costs

The challenge with clerical workers in most companies is the rate of turnover, , , they are the highest turnover group in your company which has additional cost implications such as recruiting, hiring, training, etc. Automating clerical processes allows you to just “not re-hire”  as clerical employees leave your company.

10 ways to eliminate paper

  1. Document management systems – Implement systems that create and distribute electronic documents versus creating paper.
  2. Company policies on use of paper – Are you aware many employees print out most of their e-mail messages, , , and other things like it? Lots of opportunity in creating paper usage guidelines.
  3. Duplex printers – Printing on both sides of the paper saves a lot in the long run.
  4. Electronic Distribution Systems (EDS) – Data interfaces with companies you work with can eliminate boat loads of paper. Wal-Mart implemented a company-wide EDS program in the 1980’s that has saved their company billions, , , and continues to reduce the cost of their products to consumers.
  5. Use your Intranet – Stop producing paper for company information (newsletters, employee manuals, operations policies and procedures, etc.) and use your company Intranet to publish the information.
  6. Print to PDF’s versus paper – Most company documents can be printed to a PDF file and distributed, then selectively printed by the recipient as necessary. This will drive paper costs down quite a bit.
  7. Scanning and imaging systems – This technology is so much more cost effective than it was even 10 years ago. If you have large volumes of paper coming into your company from external sources, you can reduce costs a lot by scanning the documents and retrieving the images as needed to process and store the information.
  8. Make printing harder – Selective placement of printers within your company can actually reduce the amount of paper produced.
  9. Automate clerical processes – Clerical workers are usually handling lots of paper. Automate the processes they do and eliminate the paper which allows you to eliminate the clerical worker position.
  10. Mandate change – To be effective in cutting the usage of paper, your company needs a “champion” who leads the way and encourages others in the company to look for innovative ways to reduce the use of paper. People do not change their ways easily, , , ultimately, senior management must get involved and reinforce the idea that change is required and you take it seriously.

Most companies have excellent cost saving opportunities by eliminating paper. Take a day to tour your company and just look for large “pockets” of paper and think about what might be done to eliminate the creation of that paper, what costs would be eliminated if people did not have to touch it or if your company did not have to distribute it.

You might be shocked at the cost savings opportunity !!