The Final Frontier in Cost Control


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The Final Frontier in Cost Control

  1. 1. The Final Frontier in Cost Control Most companies don’t see themselves as in the “document business.” Core practices are typically in finance, healthcare, law, manufacturing, retail, services or education….just to name a few. Yet, documents are really a core business process for all industries because it is documents, mounds of mail, brochures, print-outs, reports, memos, documentation, financials, manuals and statements that authenticate business continuity. Without all this, organizations would cease to exist. Take any portion of this away and an organization’s infrastructure would fall to its knees. Professional organizations manage their employees, expense accounts, portfolios, taxes, productivity, retirement plans, cash flow, succession plans, even customers and clients – yet Document Management is as much an oxymoron as: − jumbo shrimp − airplane food − government organization − pretty ugly Sound organizations deploy programs to manage their vehicle fleets, inventory, phone charges, insurance costs and software licenses – yet documents, the very authenticity of business practices and process just keep multiplying and regenerating into haphazard, after-thought systems that are generally constructed “if at all” at the departmental or personal level. Just imagine the duplication, the space this requires, and the time and effort at the professional level expense it takes to produce then search through all of this clutter. Today’s company has an unarticulated, unacknowledged need to design and implement a corporate document strategy. Many modern medical miracles have been developed, the worldwide web has become commonplace, a small band of terrorists infiltrated the United States in the same three decades that it was predicted that we would live in a paperless office. Things we never imagined became possibilities in the same time period so many were confident that office paper would become non-existent. Oh, the technology is available, accessible and affordable, but Corporate America lacks the discipline and strategy to make the vision a reality. And it is costing us billions. The greatest return in a corporate document strategy is in two key practices: 1. Controlling printing and costs to print 2. Reducing archiving costs If we were to measure just a fraction of the costs, you would be astounded – but let’s try it on for size. Do you know where 3-10% of Corporate America’s revenue goes? What eats up 23 million tons of paper a year? That Corporate America still has an uncontrolled multimillion-dollar expense? Answer: Internal Printed Documents
  2. 2. Frankly, a research company called Xplor who tracks hard copy issues contends that most organizations spend between 6-15% of revenue on document output. Top that off with CAP Ventures reporting that 12.6% of print becomes obsolete before it can be used and we have a sad, sad story. Corporate America is taking it in the gut and because we are so caught up in our core business practices, we never get around to what to do with all this paper. And figuring out where to start seems to paralyze any good intention. Everyone thought technology would solve this problem for us but it hasn’t. Technology has improved communication, but it also has allowed us to increase communication and information. Again, if we were to only look at office printing and not to mention published documents or incoming documents – we will find that 9 out of 10 companies cannot give an accurate total of the number of internal printing devices, let alone the number of pieces of paper pumped out of the them each day. Each of those printing devices and each piece of paper forced through has created many multi-million dollar year businesses and multi- billion dollar a year expenses for Corporate America and that’s just hard dollars. It sounds simple to make a list of assets, but corporate networks are never static. Most CIO’s have no idea how many computers they own, what software is actually used, what devices are installed. It’s thriving on chaos in the IT world and printers are the least of their worries. But you can’t manage what you can’t measure. Strangely enough, rather than a management methodology it is corporate culture that dictates printer placement and as a consequence, high costs are smuggled against the bottom line because there is no strategic approach in office printing and certainly no overall management or control of documents. The typical American Business Day = 600 million pages of computer printout. We will send 2.2 billion email messages, compared to only 293 million pieces of first class mail handled by the US postal service in that same day. Like anything without controls – a teenager with a credit card, ENRON with a balance sheet – Corporate America has found printer placements on the increase. Companies are printing more paper not less. Printer placements are increasing at a rate of 10% per year. No one is muscling this activity; it has all happened quite naturally. The Digital Revolution made way for Information Growth. The 1984 birth of the PC created paper 6,500 times taller than Mount Everest. The good news is that even if you are not prepared to attempt to get your arms around the entire process of managing documents within the corporation, just addressing internally printed documents can reduce the related expenses by 10-30%. The entire process starts with beginning to manage document output devices like every other corporate asset and to start considering the soft dollars associated with fleets of these devices. For example: 15% of issue time for network administrators is related to printing, costing personnel dollars 55% of network traffic is related to printing, costing technology infrastructure dollars 60-70% of help desk calls are related to printing, costing “real bodies” Here are some facts: Hard dollar printing expenditures equate to $100/month, per employee In just one aspect of soft dollars: cartridge replacement takes 23-37 minutes and costs corporations $21 each cartridge change in employee time.
  3. 3. Simply understanding the efficiencies of deployment rather than allowing culture to dictate who gets what printers and where they are placed can save 15-25%. Focus on business process, rather than technology enablers, will streamline “actual” need rather than the quick fix of adding more technology. But again – even this one segment of opportunity is a distraction from core business processes, the processes that make money. What a shame that corporations work so hard to generate revenue just to print it away a few pennies at a time at a constant rate of accumulation. If you run the numbers, you can see there is a dramatic effect on the bottom-line. A $10 million company, spending 3% of revenue on internal printing, is spending $300,000/ year. If this company brings 10% to the bottom-line, which is $1 million, and can save 10% on that $300,000/year, they can improve their performance by adding .3% to the bottom-line. That’s a 3% improvement to the bottom-line. If they can save 30% on that $300,000/year, they can improve their performance by adding .9% to the bottom-line. That’s a 9% improvement to the bottom-line. Five years ago, Ford Motor Company cut expenses $4.3 billion in just one year. Just one of their hot areas: “discouraging employees from printing out e-mail” which they estimated cost them $.02 to $.05 per page. One would think that the financial return itself would provide the inertia to start an investigation, an audit if you will. An audit that starts with core activities related to these expenses: − Printer Asset Tracking − Document Management − Apparent Costs − Hidden Costs Here’s a picture of what is usually found: − Multiple vendors associated with printing environments with multiple contracts, price strategies and policies − Printers used as copiers for convenience − Help desk calls related to print jobs on the wrong devices − No ownership for care of printers − Printers thrown away rather than maintained − Defective, low-yield cartridges thrown away, unaccredited − E-mails, website pages and other impulsive prints laying around printers for days before finally being trashed − Unforeseen spikes in expenses due to unpredictable costs − Capital spent on printers because cost has dropped and purchase continues to fall below the radar screen Documents are critical to the continuity of business. Some are obsolete, while others have a lifetime of importance. Some drive critical business functions while others live a life of their own. People are the reason for documents. Without cavemen, there would be no cave drawings, without people there would be no documents. Unfortunately, Corporate America has its own paper press multiplying every business
  4. 4. day, clogging up the system and cranking out expense. With the growth of information, it is becoming far more difficult to have information agility. But corporations have a choice to strive to be operationally excellent or not. Or not, usually results in quality stagnating, growth subsiding, response to market slowing and less agility. Hopefully, you have gotten a feel for the issues. But just how do you get your arms around it all? “That” is exactly where the savings opportunity becomes paralyzed. We know there is a problem, we’re onto an issue. But as Will Rogers says: “Even if you’re on the right track, you’ll get run over if you just sit there.” You need some Guerrilla tactics to get started. The first step to take towards a Corporate Document Strategy is a document output analysis. Document output devices are one piece of the total document expenditure pie that will size up whether an organization is in trouble or growing toward trouble. It needs to be authorized at the highest level within the organization. The results will include “best of breed” solutions and the inertia to invest in further steps toward creating a strategy and very possibly find the money to invest in an infrastructure and strategy that long-term can save thousands if not millions of dollars. Our strategy is to consult with your management team, interact with your “Document Constituency” – the stakeholders, readers, authors and producers of documents – and provide realistic solutions that frequently come without an investment. We come with credibility and can provide evidence of that with case studies from other clients. If we can find you savings, we only ask that you allow us to manage the process where we found savings and in exchange provide higher quality resources for your organization, enhanced productivity, greater efficiency and a grip on at least one level of a corporate document strategy. We set aside the jargon and theory and help you implement. We are convinced that after this experience you will ask us to help you walk through the remainder of the document jungle.