Hidden Profits Blog

This morning I received a white paper about evaluating SaaS – Software as a Service solutions.  This has been a question that many clients have been asking in the last couple of years and one that I addressed for my own business.  There has been so much written lately about SaaS and it has been touted as the perfect solution for everyone.  Is it really?  I am not saying that it does not have its place in the smorgashboard of software options and it certainly provides numerous benefits but as the white paper points out, you must evaluate it objectively against all options and weigh which criteria are most important to your company.

The white paper is entitled ‘Evaluating SaaS Solutions: A Checklist for Small and Mid-sized Enterprises’ you can download it here tinyurl.com/2ua6qtd

The key evaluation criteria listed in the white paper are:

• Solution Functionality which includes
  • Core system functionality
  • Customization and personalization capabilities
  • Integration capabilities
  • Workflow capabilities
  • Access to data for ad-hoc analysis and reporting
• Solution Pricing Terms & Condiditons
• Uptime availability, quality of service and responsivenes of the SaaS provider – in short the Service Level Agreements (SLA)
• SaaS solution’s security and privacy
• SaaS solutions backup and recovery capability
• Saas solutions customization and personalization capabilities
• Saas solution’s integration capabilities
• Saas solutions workflow capabilities
• Saas Solution ability to provide access to data for ad-hoc analysis and reporting
• Existence of a community of SaaS solution users for networking and collaboration

I would add 2 other criteria to their list. 

1.  The ability to convert data from the SaaS system to a different system.  As the business grows or needs change there may come a time when the company decides they want their applications in-house.  What are the options for converting data from the system and loading it to a new system.  Included in this would also be what happens if the SaaS provider is sold, terminates operations and/or no longer supports the system. 

2. The technology platform.  While it is somewhat true that by definition a SaaS system will be on supported data base, programming language and operating system, that cannot be taken for granted.  Some software firms have created their own data base and/or programming language that would require dependence on the software firm or may end up obsolete in the near future.  For example several years ago I hosted my website with a company who at the time had a very state of the art editor so I could change my web content easily.  However, with the advancements today in web editors, my hosting company has fallen behind and I am now looking to move.  While this cannot be completely avoided as technology changes very rapidly, it should be a consideration just as it would be for a purchased application.

Today the selection of core business applications such as ERP, CRM, MRP are very much like selecting a long term partner.  The process should not be taken lightly weather searching for a SaaS, purchased or hosted solution.  Detail requirements need to be defined, potential solution options identified and evaluated against the requirements.  Since this is a critical decision and not something companies address on a regular basis, I strongly suggest bringing in a consultant experienced in system requirements, evaluation and selection to support your team. 

Have you gone on a corporate crash diet in the last couple of years.  After the binging in the early 2000’s and the financial collapse in 2008, many companies felt it necessary to put themselves on a crash spending diet.  So what do I mean by that.  They did one or more of the following;

• Reduced staff corporate- wide by 10%, 15%, 20%
• Halted all spending on marketing, training etc.
• Halted all capital spending on improvements, acquisitions, product development

So now it is almost 2 years later and the problems from these actions are starting to be felt.  These actions were taken to preserve the company but now the results may very well have put the company on an unsustainable path. Why does this seemingly correct response become unsustainable.  Frequently this creates a downward spiral in which

• Customers become unhappy because service suffers
• Employees become unhappy because of increased workloads and overtime
• Productivity suffers because of increased workloads
• Sales suffer because of lack of marketing and the above results of downsizing

Or the second scenario is that the company weathers the storm and sales come back company starts to grow and now they begin hiring again because they are short handed.  The end of this scenario is that they have brought all the cost back that was shed and now they are vulnerable to the next downturn.

A better approach and one that will lead to sustained improvement is to evaluate all business process and systems.  Determine where there is waste and inefficiency and quantify the impact to profit and cash flow of eliminating or reducing the waste and inefficiency.  Often by identifying and implementing these sorts of targeted cost reducing strategies not only are the costs in the business reduced to be in line with the economic conditions, but the company becomes stronger and more competitive.

We have discussed the Financial Supply Chain and the importance to cash flow and profitiabilty for optimizing it.  Optimizing the Financial Supply Chain is a function of optimized business process and effective information technology.  In my last post, I recommended that business process be addressed before selecting new information technology systems. You want to optimize in this order so you can define requirements for the systems needed and the functionality required in each system.  So how to go about evaluating the effectiveness of the current Financial Supply Chain, selecting and prioritizing the processes to be optimized and creating the new system requirements. I  recommend the first step is an assessment to determine where your problems are and cost to the company of the current Financial Supply Chain processes. 

What is involved in an assessment.  A good assessment will address 4 key areas:

1. Information technology infrastructure
2. Information systems – ERP, Operations, Reporting, Document Management etc.
3. Business Processes
4. Organization – Finance and IT

The first step is to evaluate the business processes in operations, finance, sales and other supporting departments.  Inefficient processes that you are looking to identify are:

• Duplicate data entry
• Extensive use of Excel spreadsheets
• Duplication and multiple filing of paper such as invoices, purchase orders, employment applications etc.
• Manual processes to support lack of system integration
• Non-standardized processes due to multiple systems i.e. multiple ERP or accounting systems
• Lack of integration with customers, vendors & bank
• Processes that employees feel are inefficient
• Departments that do not have access to ERP, CRM systems
• Month- end close process that requires more than 3 days

The second step is to evaluate the information systems and technology infrastructure.

• What ERP or CRM system is being used, is there more than one
• When was the last time ERP system was upgraded & what is the technology platform
• What processes are a result of issues with the ERP, CRM or other key operational systems
• What custom in-house developed systems are being used, how old are they, how are they supported
• What systems are used to create financial reports/information for finance, outside organizations, operational management
• What are the issues the frustrate the IT organization
• Is there a consolidated data center
• Do all employees have access to the core systems and servers
• How are applications integrated
• Are applications outsourced

The third step is to evaluate the Finance and IT departments

• How are the departments organized – are there multiple IT and/or finance departments
• Who heads the IT department and do they address strategic business issues
• What skill sets do each of the members of the IT department possess
• What functions are outsourced and with what organizations

These are the key components of an assessment.  By evaluating these areas you can define functions within the organization that are inefficient.  After you have identified inefficient processes the next steps are to create continuous improvement teams to define solutions to improve efficiency.

Often a consultant trained in lean methodology may provide key insights in the business processes and be able to recommend technology solutions.  If you would like assistance with your assessment or process design please contact LJR Consulting Services at 818-227-5025 or email me at lynda.roth@ljrconsultingservices.com

This is an age old question and today the chicken and egg that I am going to discuss is redesign of business process versus selection of an ERP system and which should come first.  If you listen to most ERP vendors and system integrators they will definitely say – Select the ERP system first. They say this because they believe that the ERP system has bulit-in best business processes so then you can redesign your business processes based on how the ERP system is designed.  While I agree that ERP systems do have good process design in them, more goes into business process redesign than just how the ERP system functions.  Also, the company will have much better understanding of what they need from an ERP system if they have thoroughly reviewed their business functions and processes prior to an ERP evaluation.  So while you will not design processes down to the level what screens in the system are used to process a transaction, you will define the following

•  what functionality will be used and the importance of each system function
•  how data will flow in the organization
•  what new policies and controls will be required as a result of the new processes and ERP system
• what departments will perform what functions.

Some say it really doesn’t make any difference you can do this in either order.  Well let’s look at some examples and the situations that can arise from selecting an ERP system before you define business process.

Selecting the wrong ERP system.

I had a client a couple of years ago that is obtained because the owners were concerned about the rapid increase in the need for accounting personnel in their company, how long it took to complete the financial close process and the inadequacy of the financial information they had to manage the business.  I spoke with them and performed a detailed assessment.  The result of the assessment was that they had significant duplication of effort between operations and accounting, poor integration of systems and extremely manual processes.  They were using an old version of one of the Microsoft ERP systems and an upgrade with a complete revision of processes that would move origination of transactions to operations would greatly have increased their efficiency and information.  I also found out that they had purchased a new ERP system a year before I arrived and had done nothing with it.  It was not implemented at all.  This ERP system was a highly rated system that they had purchased because a very good sales rep from the company had convinced them it would solve all their problems.  We implemented the system which was adequate.  However, what solved the majority of their problems was modifying the processes and organizational responsibilities to originate transactions in operations, utilize additional functionality such as Purchase Orders and upgrading other key systems such as ADP payroll.  While the new ERP system was used, it was not necessary.  The company could have saved significant investment by simply upgrading the system they had and making the business process change.  Had they completed the assessment and business process analysis prior to the purchase of the ERP system they would not have made that mistake.

Implementing ERP and receiving little or no benefits.

A client last year requested that I help them with an ERP evaluation.  They desperately needed a new system for multiple reasons including new business process.  I suggested that they redesign the business processes prior to detail evaluation because I knew there would be much contention and resistance to change in this company.  They felt they needed to move forward quickly with the ERP evaluation and assured me they would perform a detailed business process design after the system was selected.  So we did fairly detailed requirements analysis to support the ERP evaluation.  This was critical because it did help them to select the right ERP system.  After a 3 month evaluation process they purchased a quality system that would provide them the platform to make the necessary changes to their business.  However, where the problems arose is that once the system was purchased, all the management just wanted the system implemented.  They were no longer interested in putting in the time and energy to redesign the business process and data flow to obtain the maximum benefit from the very hefty investment in the ERP system.  Instead they configured the system just the way they used the old system, they did not clean up any data and after 8 months of implementation they moved the new system to production.  To their great surprise they had worse problems than with the old system.  Why?  Because now they were using a system that had race car like functionality like it was an old clunker.   Except for solving technical problems they obtained absolutely no benefit.  Now they will spend more money to fix this problem.   

System Selection Done Right

A client I am currently working with has the problems that I see all the time.  The company has grown dramatically in the last 10 years and has completely outgrown their systems and processes.  I performed an assessment for them last year, and they already knew they were going to need a new ERP system.  However, they were unsure as to what was the most important functionality and how they would implement some of that functionality like purchase order in their organization.  So they agreed to embark on a business process design using lean business process techniques.  They continued to prepare their ERP requirements utilizing information from the lean business process project that we coordinated.  As a result they have now worked out policy issues, defined details on the impact to operations of certain new functionality, defined how they will integrate other custom systems with the ERP modules.  Now they are in the process of reviewing the ERP systems on their short list.  The business process project has given the executives a level of understanding of how ERP systems work and what their business will need that they would not have had otherwise.  They will make a much more informed ERP decision and be able to implement it much faster with significant benefit to the organization.

My experience with these and numerous other clients over the years indicates that a company that performs a fairly detailed business process review and design based on lean business practices and standard ERP functionality will make a much more informed ERP decision and experience a much higher ROI and level of satisfaction from their ERP implementation.

For help with your business processes or ERP systems contact LJR Consulting Services at 818-709-6583 for a free consultation.

I am reading a new book ‘Optimizing Back Office Operations: Best Practices to Maximize Profitability’ by Zahid Khalid.  While the title may sound a little boring, I was so excited to find this book. It is a very good read and definitely not boring!  Zahid has gone into detail of the business case for creating lean business processes in back office operations.  He has given the name ‘Financial Supply Chain’ to all the operations that are performed to consummate the business transactions for a company and document them per accounting and regulatory requirements.  This is a perfect description of these processes because

1. It is a simple and easily understood metaphor for all the business processes

2. It describes the importance of these business processes.

www.amazon.com/Optimizing-Back-Office-Operations-Profitability/dp/0470531894

Most business people understand the importance of the Operations Supply Chain and impact on the businesses profitability.  If your operations supply chain is inefficient, manual, and ineffective, most businesses would be out of business in today’s competitive environment.  As Zahid points out many companies like Dell have grown dramatically and become leaders in their industry because of the advances and often complete redesign of their Operations Supply Chain.  As with Dell, the Operations Supply Chain has given them a competitive advantage.

Zahid asks the question ‘What is the compelling reason for taking the plunge into the world of financial supply chain?’  Answer ‘ CASH’!  He states that independent studies conducted by several research firms estimated that between $500 billion and $1 trillion is tied up in unnecessary working capital globally in the financial supply chain.  That is a lot of money and a lot of lost profitability!!!!   As Zahid points out  ‘Working capital optimization improves cash flow, thereby minimizing reliance on lines of credit and other short-term borrowing.’ It also reduces time required to perform the tasks of the financial supply chain, reduces the number of employees required, improves the accuracy of the information produced and provides that information in a timelier manner for decision making.

Let’s discuss each of these benefits in a little detail

1.  Minimize reliance on lines of credit and borrowing.  In the easy money days of a couple of years ago most executives did not worry about how much they used credit and just accepted it as a need in business.  Now, however, with banks pulling back on credit, executives are seeing their ability to meet the demands of their businesses severely restricted.  Reducing dependence on credit now means survival to many businesses.

2.  Reducing time required to perform the tasks of the supply chain.  This has numerous benefits since when we reduce time we reduce cost of each transaction which goes directly to profit.  As we all know $1 of reduced cost translates directly to $1 of increased profit.  However, usually reduced cost means pain but by creating a lean optimized process, you can have reduced cost without pain.

3.  Reducing the number of employees is part of the reduction in cost.  It also helps to improve accuracy because we all know that the less hands in the soup the better it is. 

4.  Improving the accuracy of the information produced is one of the most critical aspects of Financial Supply Chain optimization.  It is the equivalent of reducing errors and waste in the Operations Supply chain.  Poor quality of information leads to embarrassing restatement of financial results, poor management decisions, loss of revenue, and increased cost from late charges, and inaccurate payments.

5. More timely information for  decision making is probably the most significant benefit.  In the days when business moved at a slower pace it was ok to use information that was aged for decision making.  But information is not like a fine wine that gets better with age, it rots. Today information has a very short shelf life and to manage a successful business information is needed when it is happening not 30 days after the fact.

As we have discussed on some of these posts creating lean or optimized business process requires a combination of process change enabled by information technology and services from financial supply chain partners such as banks.  It also requires team members that have knowledge of finance, change management, and information technology.  Optimizing your Financial Supply Chain may be challenging and time-consuming but also extremely profitable.  Contact us at 818-227-5025 to discuss how an Optimized Financial Supply Chain can improve your profitability.

In the last couple of posts I talked about the importance of looking at the organization differently, expanding thinking beyond our day to day limited view to find ways to change processes and technology to improve the business, successfully navigate the current economic situation and become more profitable.  This post is a continuation to discuss how to get started. The idea of creating a lean organization is a concept that today many executives are talking about.  You could almost say it is the new fad!  I am a very strong proponent of lean thinking and do believe it is the next level for business to improve productivity.  Most companies have the core business systems needed to function and so the benefits of just implementing technology have already been integrated into the organization.  So using Lean principles to get the next level of productivity is important especially with the current economy.  However, like many new ideas or concepts, it is easier said than done.

So what are some of the challenges that companies face when they want to take on lean projects.

•  Resistance to Change and Skepticism
•  Lack of Expertise in Lean Process
•  Lack of Exposure to other Technologies and Processs
•  Lack  of Time – Too Busy Chopping Wood To Sharpen the Ax Syndrome
•  Lack of a Decision Process on Policy Changes, Project Priorities etc.

These are all very real challenges and not unlike the challenges faced when new technology is implemented. The first thing for organizations planning to apply lean processes is to realize these challenges exist and plan how they will be addressed.  I will discuss each challenge individually in future posts.

The next step in getting started is to pick a pilot target area. This should be an area in which the lean process has strong support at all levels of management. It should also be an area where there is significant pain in the processes.  For example, a process in which the competition has an advantage over your company.  Or an area where employees are working significant overtime, have high error rates and/or can’t keep up with the volume of work.

Once the pilot area has been identified, you need to determine the team members that will be involved.  It is very important to have team members from different areas of the company, not just from the selected business area.  If the team consists of just personnel that work in the area to be addressed there is a very strong tendency to make very limited changes.  You should include employees from departments that are touched by the area to be made lean.  The goal is for the team to understand the entire business process from the beginning to the end, not just the area that seems to be the problem.  It is also very beneficial to include on the team personnel that have experience at other companies.

Finally, bring in outside support.  You do not want an outside consultant to do all the work, however, you Do want an outside consultant to provide input in the following areas:

• Project Management 
• Envisioning possible new processes
• Mentoring team members 
• Change Management

 The consultant should be a firm  who has experience with lean techniques, the business processes, technology solutions and change management.  By doing this it enables you to overcome some of the change resistence, keep the project moving forward and provide insight into new process options and supporting technology.

Get started with your project. Keep moving forward and Be Successful!!

I have spoken to numerous businesses in the past several weeks regarding the systems and processes the company uses and whether they should change or update them.  I hear alot of ‘We are not sure if we can afford to do get a new system or change our process’ or ‘We are not sure it is a good idea to change’.  And of course there is the old adage ‘If it isn’t broke don’t fix it!’. 

The question is ‘How do you know if the system or process is broken or not?’ and ‘What is the cost of not changing?’  In their book ‘Lean Thinking’ James P. Womack and Daniel T. Jones discuss the Toyota approach of ‘kaizen’ – continual incremental change and the need to rid the business of ‘muda’ or waste.  If we honestly look at the business, especially a business with an accounting/manufacturing system that is not current and business processes that have not been revised in several years, there is probably alot of muda or waste. 

What is the cost of the waste?  Extremely High!.  In it’s most innocent form the company hires many more people than are required to perform all the functions necessary to create, market and deliver products or services.  The next level is where the company does not receive critical information to indicate problems that exist in the business and identify solutions to rectify problems.  The most egregious level of waste is when the company can no longer be competitive and looses marketshare and reputation as a result of waste.

You think ‘Oh Lynda that can’t happen today because every company has a computer system and probably a website!’.  Yes it is true that every client and prospect I have spoken to has some sort of computer system and almost all of them have a website. The question is how effective is the accounting system, when was the last time it was updated, are they using the features in the system and are they using other technology that makes the system and processes more effective.

 Let’s look at a few situations where the waste resulting from not changing can really cost a business.

Scenario 1.

A company uses a system that

•  is no longer supported by the software vendor or by the consultant that developed it,
• the hardware it runs on is no longer supported and it cannot process on new hardware
• the system has been modified or the process circumvented so much that the data in the system is no longer reliable.

As a result of this the company cannot  meet product delivery deadlines, their inventory is growing because they do not know what materials are needed for the jobs, they have to write off millions in inventory shortages because they cannot accurately track the inventory usage.  What is the cost to that business for not changing its system?  What is the exposure that company has if the system fails? 

Scenario 2

A company is growing rapidly.  The system and processes they used before are now becoming very cumbersome and they continue to hire people in multiple locations to support the operations. They have acquired other businesses and now support multiple systems.  The financials show that even though the company is growing in revenue the margins are shrinking. Or management feels out of control because they do not have access to critical information.  What is the cost to that business of not reviewing processes and finding ways to automate more functions so they hire less people? What is the cost of not consolidating onto a single corporate system?  If the trend continues the company may become unprofitable or loose momentum.

Scenario 3

A business invested in a new system and implemented it but they did not see any change or very minimal change so they feel they wasted money and time.  They did if they purchased a system that only supported the current processes or if they did not implement lean processes when they implemented the new system.  What is the cost to that company of using a new system to do what they have always done?

You ask  Does this really happen?  I see it every day. ‘Why don’t the companies see this and make the necessary changes?’  Often it is because managers and executives need to do their jobs, they don’t have time to learn all the systems, technology and business practices that are available.  Also, many companies just adapt to the problems, find ways the put band-aids on the problem and then say they don’t have the time or resources to get new systems.

The reality is ‘They can’t afford not to make the changes!’.  Our business and technology environment changes rapidly today.  Businesses that don’t change and don’t become lean will be left in the dust. 

The best way to address  these issues is

1. to have either an outside consultant or an internal team review the company’s process and systems on a regular basis,
2. identify areas that may be improved and the solutions to support the change
3. prioritize each issue
4. allocate time and resources to the projects
5. reward team members for embracing the change.

For more information visit my website and listen to the recordings of our free teleseminars.  www.ljrconsultingservices.com/teleseminar.html

You can also call us for an assessment or inquire about our seminars at 818-709-6583.

In the course of my week, I meet numerous professionals many in the M&A (merger & acquisition) business. In our discussions the topic frequently turns to the due diligence required for a transaction to take place. The purchasing party needs to verify the information the acquisition target has provided so a group of accounting and finance professionals are used to validate the financial status of the company. The financial team works on the numbers, determines how to save cost by consolidating,  and how to grow the business.  In the end they create this fabulous financial model of what the company will look like in the future.

What I find interesting is that all the information they use comes from computer systems.  Today all businesses run at least transactional on some sort of computer system.  Rarely does the due diligence take into account the need for a review and planning for the technology and computer systems.  And what happens all too often is that lack of review and planning of the computer systems and information technology results in the demise of a beautiful financial plan.

What do I mean by IT due diligence. IT due diligence falls into 3 major categories:

1.   A review of technology, systems and processes that currently are used by the acquiring firm.  This is important to understand the ability of the acquiring entity to absorb the acquisition(s).  

2.  A review of the acquisition’s technology.  This would include evaluation of

• Infrastructure (hardware and software) to determine its life, the cost of support and the skills required to support it.
• Contracts for IT to determine legality of all licenses, transferability and cancellation requirements in each contract.
• IT personnel review to determine the key employees required to support the existing IT structure and the skill sets that are transferable to the combined company.

3.  Preparation of a transition plan that would define the technology required for the new company and the tasks, personnel and investment required to complete the transition.

This due diligence should be done before a deal is consummated by experienced IT professionals as the results of this due diligence could have an impact on the final financial deal.

On my last post I described the Profitability Vice. So what are some things that can be done to help the situation. Options come under 2 major areas – reducing key expense areas and becoming more efficient.

As I mentioned in my previous post, there are companies today that will come in to your organization and review major expense areas such as freight, payroll processing, credit card services, insurance etc. The majority of these services are paid based on actual savings.

In this post I want to focus on becoming more efficient. While there is alot of talk about productivity improvements and certainly a tremendous amount of technology available that promises productivity improvements few companies have realized the value of their investments. Why is that? In my experience the primary reason is that businesses rarely make changes in the business processes to improve efficiency. So what can a company do? The first place to focus is on the current ERP (business accounting) system that the company is using. Some of the common issues I have found in clients I have worked with are the following:

1. The company does not use the Purchase Order module of their system and as a result the AP department has numerous manual processes required to approve and pay invoices. When an electronic purchase order system is used with embedded rules, automated workflow and matching of receipts, all the information exists in the system for the AP clerk to enter and pay the invoice without delay.

2. The company has not upgraded their system in several years or has upgraded but not used new features in the system. As a result they do not have access to many of the productivity enhancing features that are available.

3. The company does not integrate technology from their bank, vendors and customers with their systems to streamline work and reduce manual process.

4. The company does not use an integrated system, instead they have modules from a variety of vendors that do not integrate with each other. This results in numerous spreadsheets and manual processes being used to plug this lack of integration.

5. Companies do not use current options to receive business financial data and key indicators online, via email or on handheld devices and rely on paper reports or spreadsheets prepared by financial analysts. his results in numerous manual processes to prepare critical information for management and a lack of critical timely informaiton.

6. Companies do not allow non-financial employees to use the system and enter data. This results in multiple duplicate functions especially when the company has multiple locations.

7.  Companies do not utilize add-on technology such as web-based functions, document imaging, handheld functions, etc. These new technologies provide added ability to eliminate manual processes, reduce time and resources.

If any of these areas sound familiar to you then you have some easy ways to quickly improve efficiency. 

I live in California and of course all the talk on the radio, at water coolers and in homes is the financial mess the state is in and how are they going to address the deficit.  The legislature insists they need to raise taxes to increase revenue and in the last election the public has said no more taxes.  Meanwhile the state keeps spending.  They are caught in what I call ‘The Profitability Vice’. 

The Profitability Vice is where there is upward pressure on cost and downward pressure on prices/revenue.  This happens to businesses also and in this economy it is happening more and more.  If the CEO does not find a way to reduce costs or get an infusion of cash, the company will be in serious financial difficulty if not bankruptcy and liquidation.  Conventional thought says the only option is to cut costs across the board or borrow money.  This is always painful as we are experiencing with the debate in the California legislature.  If they borrrow money the problem is not really solved and future costs go up due to increased interest.  Accross the board cost cutting simply hurts everyone and in the end the cost always come back.

The best option is for the company to become more efficient, therefore enabling the company to make strategic cost reduction.  A company becomes more efficient by streamlining business process and effectively using information technology.  Almost every company in inherently inefficient due to growth and the evolution of technology.  There are numerous options available today  to even smaller businesses that were not available just a few years ago. Assessing the business to identify areas of inefficiency and  solutions to reduce that inefficiency can often reduce manpower and other costs and improve customer service.  I will discuss some of these in future posts.

In addition to improving efficiencies, strategic cost reductions can be made by renegotiating services. Many companies do not regularly review the spend of key services and as they grow this can represent areas of opportunity for cost reduction.   Mid-market companies often pay more for services than larger companies because of the volume or just because they don’t have the manpower to spend time negotiating these items.  There are firms that offer free analysis and renegotiation of key cost areas and are paid only on real savings.

So have an assessment of your business done before you make random cuts and loosen the grip of ‘The Profitability Vice’.