Cost Reduction Initiatives ain’t going to Get You Nirvana

You have choice to make in terms of where you and your office spend time –Is it with reducing cost for your business or keeping your business relevant in the marketplace. Flipkart, by leveraging the power of cloud and mobile computing, has created significant value for its stakeholders. Their traditional retail counterparts have been working on initiatives to reduce their next year energy expenditure by 10%.

Roads built with L1 bidding have not quite lasted long enough

Indian businesses and our cultural management practices altogether, have tendency to involve procurement in every buying decision, including technology. However, management should be conscious of their role in certain critical and strategic areas. Long-term strategic decisions cannot be influenced by short-term cost savings. Remember, all roads that were built by L1 bidding contractors have not lasted quite enough. CIOs should demand and must have set budgets for organization’s strategic initiatives. Let the best techno-commercial experts drive decision-making through single minded focus on ‘the impact on businesses’. CIOs really need to arm their offices with strategic thinkers, who clearly understand business and not with procurement specialist bent of mind, aiming to save short-term cost. You should avoid getting into counterproductive negotiations that only satisfy a few egos, at the same time harming company’s long-term strategic objectives.

I know of a large pharmaceutical company that long wanted to purchase an HRMS that can result in ‘Happy Employees’. The IT Office, HR Office and Procurement Office were engaged in protracted negotiation of over six months, after finalizing the software vendor to save on total cost of ownership. What I don’t fathom is the cost on business and months spent negotiating a small sum in bargain? What else could have been achieved for the company in that same time? As a result, they are very unlikely to have happy and motivated vendors who would put in their 100%. In stark contrast to this, Bajaj Finance was busy cutting down decision time for consumer durable loans from 5 minutes to less than a minute, simultaneously, investing on Azure cloud platform for post approval loan fulfillment processing to provide greater business acceleration and uptime benefits. In SME business, loan category using combination of Analytics on historic data, CRM engine and sharp customer segmentation approach, plan is to launch a program to approve and disburse loans with-in same day of customers’ acceptance and reduce documentation by close to 75%. Today, Bajaj Finance is investing on technologies and processes to stay ahead of the competition and working on selecting and implementing technologies with their focus on staying relevant, staying ahead, being strategic in the marketplace. This would eventually result in greater customer satisfaction and shareholder value. 

Mr. CIO, you are living in a time where you can make difference and leave a legacy behind. Choice is yours. Through cloud and mobile computing technologies you can do lot more than you could have done in the past. Don’t let the procurement ruin the party!