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01 April 2019 3 min read

Three year cost saving exercise

 

 

 

 

How does an organisation scale numerous cost reduction opportunities and drive savings from its three-year financial forecast?

 

Client requirement

Baringa was asked to identify and size the opportunity areas for cost reduction in the business-wide three-year financial forecast.

Business cases and PIDs were required to support each opportunity to a level that would allow the sponsors to make an informed decision and mobilise approved changes.

We also needed to support the execution of the opportunities going forward, construct high-level roadmaps and carry out operating model impact assessments.

 

Baringa’s role

We facilitated the ideation of 150+ cost hypotheses which we distilled down to eight priority areas with Board sponsorship. These were:

  • People, property and location policy
  • Customer profitability
  • Rationalisation of products, propositions and apps
  • Distribution
  • Contract management
  • Partner synergies
  • Zero-based budgeting / activity-based costing
  • Downstream savings from Capex reduction

We used data analysis to validate and scale the hypotheses. Baringa’s wider network helped develop an outside-in perspective to form recommendations. We built Business Cases and PIDs for validated opportunities outlining the costs, benefits and delivery outline. We confirmed the client business owners accountable for delivery who would also signed off Business Cases and PID documents.

 

Outcomes and impact

Baringa helped identify £67m-£112m of cost savings on top of the client’s three-year plan from 2018-2020 which had been prioritised and validated with client stakeholders. During our work, we identified additional areas where other costs savings could be made. Business ownership for delivery was confirmed and documentation was put in place for each opportunity to be immediately moved into implementation. This included deliverables, team roles, risks and issues, milestones and budget.