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During uncertain or tough economic times, enterprises are often required to tighten their belts. As labor is always a material cost and one that quickly finds itself under the cost cutting microscope, human resource professionals are critical in looking for labor and other cost savings opportunities while exercising caution so as to not throw the baby out with the bath water.

Gartner analysts illustrated a 20 point list in order to give business leaders, IT executives and HR professionals some early guidance on cost reduction opportunities.

  1. The first place management will evaluate will be people costs. When looking at information technology (IT) costs, Gartner estimates that 37 percent of the average IT budget is dedicated to staffing. Gartner suggests a mix of hiring freezes, reduction or elimination of performance-based bonuses and reduction of outside contractors. Another idea for decentralized or global companies that have opened locations in remote territories is to consider returning those workers back to the central office

  2. Flatten the organizational management structure. Instead of having one supervisor manage six or seven staff, reduce the number of middle management layers by asking executives to manage up to 20 people. A flat organization not only saves significant money but also can produce greater operating efficiencies.

  3. Look for shared services opportunities. Consolidation of services or business processes, such as functions like the help desk into one group that services the entire company, provide sustained cost advantages.

  4. Begin with the most current budget and lean on finance leaders to creatively analyze the budget and find ways to help trim costs.

  5. Don't ignore unmanaged or uncontrollable costs like printers or data center power.

  6. Go back and verify prior vendor invoices to make sure your suppliers are billing you what your contracts specify. Certain types of vendors are notorious in gradually inserting add-on charges or charges not previously agreed to

  7. Eliminate unused application software. Even though you may not be using it, you may still be paying the annual software maintenance

  8. Get tougher with suppliers when it comes to negotiating contract purchases. So that you can be prepared to switch vendors if necessary, begin the research to determine the costs and issues associated with a supplier switch.

  9. Consider buying a telecom expense-management service. These services generally pay for themselves and more.

  10. Procure a company-wide cell phone plan that optimizes expenses. This will be much less expensive than permitting staff to purchase their own cell phones and then submit expenses

  11. If there are places where you don't need five nines of availability, settle for three nines. Lower service levels will save you money when you negotiate with your suppliers.

  12. Evaluate videoconferencing as a method to reduce travel and consider purchasing videoconferencing equipment rather than constantly renting.

  13. Evaluate where the web can be used a as a replacement for expensive WAN transport traffic.

  14. Defer moving to Vista (which generally requires expensive hardware upgrades). Get an additional year of use out of your existing PCs.

  15. Use commodity products where possible, and pass on best of breed in cases where 'best of need' can suffice.

  16. Consolidate and virtualize servers.

  17. Reduce data storage costs via data deduplication and data classification methods.

  18. Use better business processes and updated policies to make better use of existing tools.

  19. Deploy IP telephony and VoIP as a way of cutting costs for moves, adds and changes.

  20. Reacquire unused software licenses and re-deploy them for new hires.


On Demand ERP Systems  

HR Spending Analysis

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Cost Cutting Destinations
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Budget variance items
Vendor pricing agreements
Unused application software
Cellular communications
Business travel expenses


tags Tags:
erp definition
cost cutting measures, labor cost cutting, human resource software, budget turn-around, shared services, cfo, hr staff, voip, business application software, cell phones, sever virtualization















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