Intelligent cost management – a strategic priority
Cost management, cost cutting and cost containment are vital in these credit-crunched double-dip-risky times. Cost is now at the centre of strategy, and will be for many years. For the private sector this has been true since the dreadful September of 2008. For the public sector the cost-cutting tsunami is only now rushing onto shore, as governments confront huge deficits.
We all want to cut and manage costs intelligently, not simply slash and burn. What are the key characteristics of intelligent cost management?
We all want to cut and manage costs intelligently, not simply slash and burn. What are the key characteristics of intelligent cost management?
Read the full article at http://www.box.net/shared/8gdxy5bgq6
Three big myths about public sector cost cutting
“We only need to cut cost because of the credit crunch crisis.”
No, there is a deep structural problem that was there before the crunch. The public sector has been driving up its share of GDP for decades, in the UK, the USA and almost all advanced western economies. Its momentum will be painful to slow down, let alone reverse. This underlying trend was concealed in the nineties and noughties (when the talk was of “the end of big government”) by a debt-bubble-fuelled growth in the private sector. In the UK, we are already over a 50% state share of GDP. In the USA, post Obamacare, the state’s share of GDP, already at 45%, could also rise to over 50% in the next decade. An American Rip Van Winkle from the 1950s waking up to a 50% state economy would think the USA had lost the cold war and become a Russian satellite.
http://blogs.reuters.com/great-debate-uk/2010/04/14/three-big-myths-about-public-sector-cost-cutting/
No, there is a deep structural problem that was there before the crunch. The public sector has been driving up its share of GDP for decades, in the UK, the USA and almost all advanced western economies. Its momentum will be painful to slow down, let alone reverse. This underlying trend was concealed in the nineties and noughties (when the talk was of “the end of big government”) by a debt-bubble-fuelled growth in the private sector. In the UK, we are already over a 50% state share of GDP. In the USA, post Obamacare, the state’s share of GDP, already at 45%, could also rise to over 50% in the next decade. An American Rip Van Winkle from the 1950s waking up to a 50% state economy would think the USA had lost the cold war and become a Russian satellite.
http://blogs.reuters.com/great-debate-uk/2010/04/14/three-big-myths-about-public-sector-cost-cutting/
Read the full article at http://www.box.net/shared/tk2ry4bjl4
How the Finance function can take a strategic leadership role on cost containment
Cost containment is vital in these credit-crunched double-dip-risky times. In such times, good CFOs, finance managers and analysts can drive business performance by taking a strategic lead on cost.
The Finance function has several roles to play. As a ex-CFO, I will use the “royal we” ... we need to:
1. Make sure all our costs are real, legitimate and correctly accounted for – including risk assessment and risk mitigation
2. Provide regular, accurate and timely cost data (in management accounts etc)
3. Provide insightful analysis of the cost base and cost trends (past/current/future)
4. Be the historical memory of the business in identifying and learning from past pitfalls and past successes – our own, our competitors’, other companies’
5. Be proactive ...
The Finance function has several roles to play. As a ex-CFO, I will use the “royal we” ... we need to:
1. Make sure all our costs are real, legitimate and correctly accounted for – including risk assessment and risk mitigation
2. Provide regular, accurate and timely cost data (in management accounts etc)
3. Provide insightful analysis of the cost base and cost trends (past/current/future)
4. Be the historical memory of the business in identifying and learning from past pitfalls and past successes – our own, our competitors’, other companies’
5. Be proactive ...
Read the full article at http://www.box.net/shared/1xdo26zlk4
The Six Million Dollar Cost Manager: “Better, stronger, faster”
1974. Oil crisis. Plummeting stock markets. Recession. But wait … here comes The Six Million Dollar Man, resurrected to save America, with super strength and bionic vision.
Today. Ballooning deficits. Spooked markets. Double-dip doom and gloom. Where is Lee Majors when we need him?
My book on how to manage and cut cost hit the shelves in summer 2008, just as the credit crunch tsunami hit the beaches. I argued that good cost management is not just for downturns but for always. When I present from the book at seminars and conferences, I now get asked: “Things are staying very rough, nastier for longer than we thought possible … is there anything different we should be doing, over and above the cost-cutting norms? And what mistakes can we avoid?”
Today. Ballooning deficits. Spooked markets. Double-dip doom and gloom. Where is Lee Majors when we need him?
My book on how to manage and cut cost hit the shelves in summer 2008, just as the credit crunch tsunami hit the beaches. I argued that good cost management is not just for downturns but for always. When I present from the book at seminars and conferences, I now get asked: “Things are staying very rough, nastier for longer than we thought possible … is there anything different we should be doing, over and above the cost-cutting norms? And what mistakes can we avoid?”
Read the full article at http://www.box.net/shared/h291bjl7j2
