With this economic turmoil in the last month, I am seeing a dramatic shift in focus from building and growth to efficiency and cost reduction. These times are similar periods in each of the last three decade when we faced similar challenges. I thought about which strategies to dust off and use now to help deal with these economic realities.  Two winning strategies are outsourcing and technology rationalization. When approached the right way, these strategies rapidly deliver cost reduction, but also improve service delivery and differentiation. So what are the options? When companies start to consider ways to reduce costs, there are some typical strategies they consider:

  • Recruitment freeze / Budget reductions – The challenge: This can create an unbalanced employment profile
  • Supplier Renegotiation – The challenge: This is a good strategy, but takes time and requires knowledge of and monitoring of total business spend
  • Process Re-engineering – The challenge:  This also takes time and requires access to best practice skills, also the time to full payback can be extended
  • Strategic Outsourcing – The challenge: With Outsourcing you need a service management process to manage the relationship. you might also face resistance among management
  • Central Service units – The challenge:  The approach can work well, but can go against culture and can take time to implement.
  • Rationalization of IT Applications – The challenge: This is a solid approach to consider continuously, there will be some one-time costs for integration and decommissioning of applications.

I think the two that work particularly well in times like these are Technology Rationalization and Strategic Outsourcing. Both of these strategies can actually enhance your market growth and service strategies while reducing costs. Some obvious areas to focus on include:

  • Technology Infrastructure
  • Procurement Processes
  • Marketing Platforms and Digital Channel Management
  • Corporate Events and Meetings
  • Redundant and Overlapping Applications

I would start with Rationalization – this way your Outsourcing strategy will be more directed. Plus, sometimes, Outsourcing is the weapon to drive Rationalization! Step 1, Rationalize Technology Portfolio Over time, we add on to our application portfolio and create a kluge of systems that inhibit users (internal and external)  from consistent access to the information and services they need. As an example, too often Marketing technologies touch your audience in multiple inconsistent ways and are not underpinned with a single view of the audience, effective community, web 2.0 experience and isnights through data management. Technology rationalization is a first step in creating an overall technology architecture that aligns with your business model. Benefits include:

  • Drive down costs and total cost of ownership for redundant applications
  • Streamline audience experience and audience intelligence with rationalized systems portfolio
  • Drive simplification and increase productivity
  • Rationalize project portfolio aligned to business drivers
  • Consolidate contracts
  • Rationalize licenses

Step 2, Outsource Strategically Clients still look to outsourcing to reduce costs and enhance shareholder value, but there are many other reasons to outsource. When done strategically, Outsourcing can and should enhance your growth strategy. Some benefits include:

  • Improve Cost predictability
  • Focus on Core business
  • Consistency in delivery with reliable outcomes
  • Flexibility to address to market changes
  • Access best practices and re-focus on differentiation
  • Gain access to specialist skills
  • Improve quality of service

Get started by answering a few questions.

  • Are you spending too much on an application portfolio that is not well integrated or aligned with your current business strategy?
  • Are there options to consolidate application systems and drive business value?
  • Is the organization ready to consider strategic sourcing options?
  • Which areas of the business portfolio can be better managed through a strategic sourcing relationship?
  • How much can be saved through thoughtful rationalization and sourcing strategies? How much can be gained?

I enjoyed a trip to Philadelphia last week to attend the ITEC Conference . I spoke at two sessions on Thursday, here is a summary. Session 1 Second Circle Web 2.0 and New Marketing Metcalf’s Law – The value of a network is proportional to the square of the number of connected users We are in a new digital ecosystem and the search box is the new window to our intentions:

  • 112M million blogs
  • Bloggers are mainstream
  • 2,700 Social networks
  • 1.5 million photos added to Flickr daily
  • 4 million daily Twitter messages
  • Average age of evening news viewer: 60

As Chris Brogan has shared many times, there is a new information model: Information must be: Dynamic, Localized, Atomized, Relevant, Mashable, Mobile, Shareable Web 2.0 is a jargon term and overused, but it still is understood as representing a wide range of new technologies that share some common principles: Participation Social Software Mobility Folksonomy The Long Tail We talked about the following technologies that can transform new marketing and PR: Blogs Microblogging RSS, Content Aggregation and Syndication Wikis Session 2 – Web 2.0 for KM & Collaboration The second talk focused more within the enterprise and discussed how similar technologies are having an impact with team collaboration and innovation. Companies are realizing the benefits in using Second Circle tools for KM and Collaboration. However, there are some key differences inside and outside the firewall. Need for security Firewalls restricting access to social networks Regulations/ Sox prevents transparent communications Mix of public and private networks for content Rich new media impacting network performance Documents buried across servers and desktops Culture doesn’t support blogging and sharing views Can’t establish my personal presence and profile online Not using RSS to keep track of my information resources Access expertise across all my networks – work / personal KM & collaboration drives innovation, participative decision making, and information access, and colleagues access across an organization: Driving efficiency and lower costs Enabling distributed, networked businesses Delivering innovation and speed to market Supporting flexible working Knowledge as a distinct factor in market value Low cost open networks and services Generations of tech-savvy digital natives. A case study in life sciences pointed out four key strategies: Building customer relationships Enhancing the work environment Achieving competitive advantage Ensuring compliance and security We talked about the following technologies and how they are being used “inside the firewall” to drive value. Profiles & Expertise Location Corporate Blogs Wikis Document Management Search RSS, Alerts & Messaging Team Collaboration Some advice: Support your “Digital Natives” Foster Grass Roots Adoption – Participation Use Tagging Strategies and Folksonomy over overly burdensome taxonomy models Adopt light weight but clear procedures and policies for Information Management Governance, Security Contact me at CrossTech Partners if you want to learn more from the presentations: [email protected]