Strategic Cost Reduction: Building a Leaner Government of the Future. May 29, :00-3:15 ASMC PDI 2014

Transcription

1 Strategic Cost Reduction: Building a Leaner Government of the Future May 29, :00-3:15 ASMC PDI 2014

2 5 Principles of Cost Reduction Rationalize Eliminate redundancies Consolidate Consolidate like things to create critical mass and improve productivity Automate Automate manual processes to increase accuracy, improve speed of execution, and decrease cost Simplify Reduce system, process and organizational complexity Restructure Restructure to lowest total cost provider of products and services 2

3 Rationalize New York Metropolitan Transportation Authority (MTA) 1. $800M budget shortfall 2. MTA needed to reduce Costs Quickly Identified $150M in savings through enterprise transformation and rapid cost reduction assessment Re-evaluated 280 projects in the operating budget and removed 141 projects through: Process Streamlining Project Elimination / Deferral Org Realignment Rapid Procurement 3

4 Consolidate New York City Challenge for 8 Million residents to connect via phone the correct POC at 50+ NYC government agencies call centers, 4000 phone numbers, 170 languages 3. High cost, poor service, tied up emergency call services Consolidated call center and outsourced operations, achieving 25% in cost savings Networked all 122 of the city s police precincts to the 311 system s database. Created scalability - Aug 2003 blackout, processed over 115,000 call/hour Applied performance metrics to drive increased speed of response and improved Citizen services 4

5 Automate Accenture 1. Challenge: Reduce real estate footprint, travel costs and time on non-value-added activity 2. Maintain existing high level of customer satisfaction Reduced space needs by 40% through: - New automated space and hoteling system - Automated tele-presence technologies. Enabled telecommuting Adopted mobile-culture and high level of automated self-enablement - Workstation of the Future / mobile apps - Online automated self booked travel Through efficient, automated processes, reduced support staff by over 50% while maintaining a high level of customer satisfaction 10% reduction in SG&A as a percentage of Net Revenue 5

6 Simplify Global Retailer 1. CEO said, It all comes down to operational excellence, making organization-wide continuous improvement a central focus 2. Focused first on identifying high-impact process areas 3. High-impact processes were reinvented, redesigned or upgraded. Revamped and simplified over 200 core business processes Saved over $800 million in year 2 - $45B business Standardized global integrated processes savings forthcoming Listened to customer needs 11% growth during last 2 years 6

7 Restructure State of Ohio 1. Ohio was experiencing decreasing revenues and escalating expenses 2. Skilled workforce shrinkage (>30% retirement eligible by 2014) 3. Significant inefficient and ineffective processes compared to other state benchmarks Built a shared Services platform for back office functions which: Decreased admin costs by 25% Increased production to process 50,000 vendor payments Decreased wait time in Contact Center to <20 seconds Reduced cost of processing travel & expense reports by over 66% 7

8 Efficiency gains and cost savings from shared services are significant Transaction Processing Economies Fortune Shared 100 Service Item Mean Mean Typical Shared Services % Cost Reductions Productivity Improvements Payroll 35% Journal Entry $1.10 $0.34 General Accounting 55% A/P Invoice $8.00 $4.44 T&E Report $20.00 $5.00 Payroll Check $6.00 $2.77 Fixed Assets Line Item $5.40 $3.75 Payables Purchasing PP&E & Capital Budgeting Receivables & Credit 25% 25% 35% 45% A/R Invoice $16.00 $7.80 Human Resources 35% Source: Society of Management Accountants of Canada, 1999, Accenture experience -20% 0% 20% 40% 60% 8

9 Final Thought 9