The 'BI' Cost Savings Agenda 2010 – How To

22 February 2010 | Category: 'BI'
Existent cost savings potential is still being currently ignored to a great extent in business enterprises today. One of the central subjects of the 2010 Agendas of 'BI' managers is the introduction of cost savings. At the core of this corporate philosophy, are two central queries: 1. What should be observed in advance, so that cost savings achieve the anticipated results? 2. Where is the leverage for cost savings to be made?

As far as the first query is concerned, experience indicates that the following provisos are to be consistently observed in order to be able to implement cost savings potential in actual fact:

1. Corporate strategy is to focus upon cost management
2. Customers benefit from cost savings
3. Cost savings are actually to be realisable and not just a shifting of costs to other cost centres
4. Cost savings are to be visibly- measured and evidenced for management and immediate superiors

Where is the leverage for cost savings to be made? The following cost savings measures should be the main subjects on the agendas of 'BI' managers for 2010:

BI-Governance: 
The interest expressed for 'BI' is growing as shown by the implementation of 'BI' capital investment budgets as well as by the analysts. However: the broader the application of 'BI' in a business, the greater the risk of a cost explosion. The systematic anchoring of a 'BI' governance facility in a business has a counteracting effect. The core of core of a 'BI' governance facility is the binding definition of tasks, competences and responsibilities, enterprise-data-warehouse-guidelines and strongly implementable decision-taking and management structures. Dilemma: the resultant cost savings are not immediately visible. Here the principle applies: experience justifies the measures. Apart from this, it is recommendable to introduce metrics, in order to be able to measure the effectiveness of 'BI' governance activities and to be able to control these.

BI-Sourcing Strategy:
The multiplicity of profiles and roles is characteristic of 'BI' environment activities. Parallel to technological skills, process- and business management competences are required. These are mirrored in the great variety of roles in the development and operation of 'BI'. This means that differentiated cost savings models should be introduced for commodity- and value-added services. Strategic sourcing and meaningfully designed overriding framework agreements with suppliers can generate cost savings of some 20% in commodity services. In cases of more complicated near- and offshore models, the cost savings can even be better improved.

BI-Technology Strategy:
We have all heard of it – the 'fancy features' requests programme – functions and technologies on the one hand, and uncertainties concerning the right technology on the other hand. The one can be explained as well as the other – and needs to b explained, if the 'BI'- hardware and software expenditure is not to explode into the immeasurable. A solid 'BI' technology strategy unites a high degree of business benefit with reasonable cost- and expenditure structures. Of exactly the same importance as the formulation of the technology strategy is however the ensuring of its implementation – even against opposition within the enterprise.

Last but not least: what role play cost savings in the area of personnel expenditure within the 'BI' environment? The fact is: the verification of the performance efficiency and the personnel strengths should essentially be an ongoing process. Experience shows however, that cost savings exercised on personnel overheads within the 'BI' environment often lead to no significant cost saving leverage. The reason: small teams and overviewable performance transparency avoid 'a priori' the build-up of inefficient overheads. In addition, personnel expenditure structures are often flexibly controllable via a high number of external workforce members. Increased attention is however to be given to the development of 'BI' personnel expenditure throughout the business: technical 'BI' know-how is increasingly being allocated to the specialist areas, driven by technological developments. This trend calls for clearly regulated governance activities throughout the business, in order to avoid the build-up of redundant structures and to apply know-how more efficiently.

Result:
Cost savings within the 'BI' environment is necessary, but not 'at any price'. The rapid propagation of 'BI' in businesses and the ever shorter technological innovation cycles cause significantly higher costs. This situation must be combated without undermining benefits for customers and the whole of the enterprise. Strategic measures on cost savings und cost control are the elaboration and anchoring of overall valid business …
…'BI' governance activities: to maintain the research and development expenditure and the operating costs, in balance
…Technological strategies: ensure cost efficient technological applications and architectural build-up
…Supplier strategy: enables significantly reduced services costs with a meaningful design and intelligent control

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Author: Marc Friedrichsen, Partner and Management Consultant at Brightcon

Brightcon AG, Switzerland
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