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KPMG Advises to Cut Costs, Improve Operations
To succeed in the current economic climate, enterprises need to improve the way they go about reducing costs while ensuring that their operational performance still remains robust, according to executives at KPMG Consulting.
Posted Jan 31, 2002
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During a Webcast on Thursday titled "The Executive Perspective on Performance Improvement and Cost Takeout," executives from the consulting firm explained its methodology on what business executives need to know to create an operational environment where they can cut down costs. That environment also includes being able to get an ROI on technology investments and also improve their operational performance, they said. The Performance Improvement and Cost Takeout (PI-CTO) solution is KPMG's methodology that shows a company how to cut costs and improve performance. This is done by analyzing areas for costs savings that includes focusing on IT costs, looking at what needs to be done to change the business and creating a list of what needs to be acted upon in order to create savings and improve a company's operational efficiency. Rand Blazer, CEO of KPMG Consulting, said the Webcast, which can be viewed at www.kpmgconsulting.com, is a good way for the company to get these ideas on the table. "The goal here is to excite the conversation between our teams and the client about performance improvement and cost take out, and make sure we really have a solid beat on what can work and what can't work in our client environment." Blazer said. The company identified five business scenarios that are ripe for its methodology: global companies with multiple business units operating in silos; mergers and acquisitions' mature IT contracts reaching expiration date; global operations in multiple country locations; numerous vendors. KPMG executives pointed out that typical areas where businesses can reduce costs include areas such as outsourcing, renegotiation of IT contracts, consolidation, integration and improved collaboration. The consulting firm has identified about 200 types of combinations that can reduce costs and improve performance. For instance, KPMG helped on enterprise firm save more than $175 million in reduced IT maintenance costs since that global firm was spending more than 60 percent of its budget on maintenance. But the idea is not just to cut costs for the sake of cutting costs, but to do it in a way that a company can function and even exceed the way it operated in the past, said Dick Kearney, senior vice president at KPMG Consulting. "A lot of times people look at costs just to take out costs and they are not looking at it holistically," he said. "If we are looking at it holistically, not only do you see cost benefits because you are taking out costs, but you are also look performance improvement. And both of those are things that people want to do to become more efficient and to be able to save money and not waste money."
Also, KPMG executives also pointed out that savings could be attained for enterprises with multiple business units in silos by pinpointing patterns across the units where costs can be eliminated, or in other cases by cutting down the number of suppliers.
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