News and Features
Stop Burning Through Your Cash
Sure-fire ways to save money on operating expenses
By Pam George
Like many people, David Fenske is facing the great economic unknown. “Unless you remember the Great Depression, you’ve never seen anything like this,” says Fenske, Dean of the College of Information Science and Technology — more commonly known as the iSchool — at Drexel University.
Few would argue with Fenske, who spent 24 years as head of the Cook Music Library at Indiana University and worked as a consultant at an IBM lab in Silicon Valley before joining Drexel’s faculty in 1999. The economy is prompting most businesspeople and educators to examine the way they do business.
In order to stay afloat, “You accumulate assets and you cut spending,” Fenske says. “You ask more questions, and you build up liquidity. Because you don’t know what is ahead of you.”
Fortunately, companies can save money without compromising quality. Many Eastern Technology Council members offer services and products that help customers become more cost-efficient and cost-effective.
Not surprisingly, many of these products and approaches involve technology. “Technology gives you flexibility,” Fenske says. “You can be more responsive to changes more quickly.”
Hold a virtual conference
By now, everyone knows the story of AIG and its infamously lavish executive conference, held shortly after it accepted federal bailout money. In response to public outrage, many corporations have cut back on destination meetings. That might eliminate travel costs, but employees still need to meet, whether it is to exchange ideas or to view presentations.
Enter videoconferencing, which companies can use to link both employees and customers, says Jim Miner, President of Judge Audio Visual Solutions, part of The Judge Group in Conshohocken, Pa.
Forget the notion that videoconferencing is unreliable, expensive and difficult to use. “Video conferencing has come a long way,” Miner says. “With the advent of bandwidth, the cost has dropped.”
Judge Audio Visual Solution uses a customized version of the Web-based OnSync videoconferencing/collaboration application. “The product has been a money-saver for large companies down to small companies that use it on a desktop,” Miner says. “You’re able to do presentations from the desktop setting at prices unheard of in the past.” The system easily converts a PowerPoint presentation or video for Web viewing.
Judge Audio Visual Solution OnSync software combines a Web-based video conference with file sharing, desktop screen sharing, URL push to all participants and chatting in a single Web browser window.
Trainers, teachers or moderators have access to the program’s high-tech tools, such as a “pencil” with which you can write on the virtual whiteboard. The moderator can even write over a video.
All the conference participants can view each other via a sectioned screen that resembles the Brady Bunch opening. Viewing the faces of attendees helps keep participants engaged. The moderator can elect to go to Voice over Internet Protocol (VoIP) to reduce the amount of bandwidth required.
John McDonald, an account manager with Judge Audio Visual Solutions, says it takes about 90 minutes to get someone familiar enough with the software that he or she could run a meeting.
OnSync’s flexible pricing is tailored to meet customers’ needs. Generally, a 10-license package is $75 per license, or $750 per month, with no long-term contracts. The cost drops as the quantity goes up, and customers receive a variety of discounts per month based on the length of use and quantity of licenses.
To get the maximum return on investment, do your homework. “A few systems have really raised the bar,” Miner says. “Talk to dealers and consultants to make an informed decision.” Understanding the software will help you select the right audio-visual hardware, including cameras and microphones.
Call on contractors
“The Judge Group is also known for consulting, training and staffing solutions. Clients may have a need for staff on certain projects or they might have a long-term position that they’re unable to fill with a new hire,” says Rob Alessandrini, Chief Financial Officer of The Judge Group. “They can use our people on a variable basis and not worry about worker’s compensation or employee benefits — we handle all that.”
The goal is not just to reduce staff costs but also to avoid mistakes, which can be costly. By relying on The Judge Group’s expertise, companies realize a savings because the job is done right, Alessandrini says.
Take a look at hosted technologies
In the past, companies had to buy phones and phone equipment from one company and phone service from another. They might also have had a separate long-distance provider, and, of course, they needed an Internet provider.
At some point, a telephone system will become obsolete, and purchasing a new one could require a loan, which today can be harder to secure than a spot on American Idol. Meanwhile, companies are handling separate bills and juggling separate maintenance requirements.
No longer. EvolveIP, a managed technology provider in Wayne, Pa., uses private broadband Internet connectivity to unify a company’s communication systems. The company specializes in managed telephony, hosted applications, managed networks and network security.
EvolveIP, which on average handles three to five services per customer, implements and manages the system to keep it secure and stable. “Because we’ve built the platform, our clients don’t need to tap into their resources to buy servers or software. We deliver it to them as a service,” says Tim Allen, Chief Sales Officer. Customers receive the services and products — right down to the handset — through a subscription service. Obsolescence is not a factor.
The company excels at working with companies that have multiple locations, says Guy Fardone, Chief Operating Officer. “We give them a central base of operations.” The majority of EvolveIP’s current customers have from 10 to 1,000 employees, but the sky is the limit.
Most customers choose a contract that lasts from three to five years. The price depends on the scope of the services. Some clients have call centers; others request intrusion detection and firewall services. The return on investment will vary depending on the company and its perspective. “Since you’re unifying a lot of things, you get scale,” Fardone says. “You don’t have the maintenance on the gear, since you don’t own it.”
The service can also boost productivity. With EvolveIP, the accounting department handles fewer bills and the IT department need not worry about maintaining the system. And there’s no need for a stack of high-end servers, which saves on energy and cooling.
EvolveIP witnessed the perks of the service firsthand when the company relocated to a larger space. “The staff unplugged their phones, went to the new building and plugged them back in,” Allen says. “It took all of four hours to get up and running.”
Consider distance learning
Distance learning students appreciate saving money on transportation. Their employers, especially those paying tuition, appreciate that students needn’t leave work early to make an evening class on time, especially if employees are traveling from the outer suburbs.
Thanks to technology, universities like Drexel can cater to an online world. The iSchool offers undergraduate degrees, as well as master’s programs in library and information science, information systems and software engineering. There is also a dual master’s degree in library and information science and information systems. While a doctorate program is only offered on campus, the master’s programs are all available online.
“You can literally earn the entire degree from wherever you are and whenever you can,” Fenske says of the online programs. “We have students in 48 states and 29 countries.” All you need is a computer, a browser program and a high-speed connection.
Fenske, who has taught both face-to-face and online, prefers teaching online. Without the peer pressure, students are more likely to contribute to the discussions, he says. “In a classroom, four to five students out of 20 talk most of the time,” he says. “The online ratio is almost reversed.” (Like campus classes, online classes are limited to 25 students.)
Despite the virtual environment, students collaborate on projects, often on a weekly basis. The team effort reflects the industry’s demand for employees who have good people skills.
Getting to the bookstore is not an issue. Students can order books online or access them electronically. However, many of the courses rely heavily on industry journals and articles, which are delivered electronically.
Although convenient for students, online classes do not save Drexel money. Studies have shown that the cost of holding classes in a building and online is about the same, Fenske says. The technical services necessary to providing a seamless, smooth experience require 24/7 monitoring. And with all the typing and logging in to check questions and messages, online classes are often more work for instructors.
“The real reason to do online classes is to deliver the lesson to wherever the student is,” Fenske says.
Acknowledging student learning habits can also boost enrollment. Traditionally, a sluggish economy sparks an increase in master’s degree applications. People out of work use the time to enhance their skills for the next job. Others seek to make themselves more attractive to employers. Fenske says April is already slightly up in enrollment, but it's too soon to tell if there is a significant spike.
“I don’t mean to suggest this is good for us,” he says of the economy. “As one who is seeing his retirement fund diminish, nobody should take that attitude.”
University officials like Fenske are keeping a wary eye on loan programs. “Those who have reasonable credit can seemingly still secure loans — but they’re loans with fewer perks,” he says. “We think most people can still get the financial loans they need to continue their education.”
Question the way you do business
Switching to a bundled communications system might be a drastic departure for some companies. But that can be a good thing. Any company looking to cut costs should put its practices under a microscope. “We need to question basic operating assumptions,” Fenske says. Drexel University, for instance, is undergoing studies to determine if current practices are sufficient, or if there is a more cost-effective approach.
To cut costs, look at the top 10 line items that can affect your profit margin, The Judge Group’s Alessandrini suggests. What costs the most? Is it worth it? Perhaps you have underutilized warehouses and need to consolidate. Look at the revenue side as well as the expenses. By analyzing your top 10 customers, you can see where the bulk of your business resides. Catering to this group might help boost revenue.
Alessandrini also recommends limiting the number of people who can approve an expense. “Picture a bunch of faucets open,” he says. “If you can turn off four or five, you use less water.”
He requests a business case for any proposed capital expenditures over a certain amount. “Why do we need it? What will it do for us? What are two alternative options and is doing nothing an option,” he says. “Because I make them write a business case, I get fewer requests.”
The purchasing agent must secure four competitive quotes. Sometimes, the lowest quote does not land the sale, he says. It is also about quality and the relationship with the vendor.
The Judge Group every year reviews significant vendor relationships to ensure that the company is getting a quality service or product at a reasonable price. Distributing a request for proposal prompts suppliers to “sharpen their pencils,” he says. Check to see what other services the vendor might provide. A package could result in a discount.
Despite the recession, going green remains a smart move, Alessandrini says. The Judge Group last year decided to do away with Styrofoam cups and go to mugs. The savings is negligible, but at least people are no longer tripping over cumbersome boxes of cups. Plus, coffee tastes better in a mug, he notes. The company’s purchase of an energy-efficient HVAC unit could deliver more savings in the long run. Although the unit cost was more than the average, it uses less electricity.
Coming up with ways to save money is a company-wide effort at The Judge Group, which offers bonuses to employees who submit solutions that the company implements. One employee, for instance, recommended going with one coffee vendor for all 30 locations, which led to a volume-based discount. “We saved money, everybody gets the same quality and we pay one bill,” Alessandrini says.
Most employees are willing to participate in cutting costs. “They look around at their neighbors, and they see what is happening,” Fenske says. “While cutting costs might change the nature of their job, they understand why. We all need to ride through this together.”
Illustration by Ted Liljestrand / DesignDesign, Inc.
|
