In a literary review in 2009, the University of Salford stated: ‘An attempt to improve traditional cost management started in 1965… However, companies have been slow to implement new tools… There is broad agreement that current cost systems are not providing enough information.’
To put this into context, a recent survey by Management Today, sponsored by Auditel, the UK and Ireland’s leader in strategic cost management, found that 60% of CEO’s now champion cost management. It is on the boardroom agenda of 82% of respondents. However only 30% of survey respondents described the cost management measures in their organisations to be very strategic. According to a KPMG survey, 95% of cost reductions achieved during the recession are expected to return in the short term. This equates to more than £90bn of costs across UK firms.
Many respondents reported that lack of understanding is their biggest obstacle in cost management. A similar proportion admit that organisational politics hampers efforts to bring costs under better control. Close to one in five point the finger at unrealistic goals as being the biggest barrier. A third of respondents said that they would seek the advice of a specialist consultant when considering more strategic cost management.
This year, Auditel celebrated its twentieth birthday. At their National Conference on Friday 28th November, Managing Director Chris Allison addressed the 180 delegates. He reminded them that over the last 20 years, Auditel has supported thousands of clients, from household brands, through to smaller and medium sized organisations. Across the public, private and not for profit sectors and in virtually every industry sector, Auditel consultants have offered cost management solutions which have led to hundreds of millions of pounds worth of savings.
As Allison says: “We have made huge refinements in the science of effective cost management and have overcome many of the professional shortcomings of past years, mentioned in the University of Salford review of 2009.”
Over these twenty years, Auditel has transformed itself from a licenced Utility Bill Auditor, with a handful of licensees, into a fully franchised model with over 200 highly-skilled cost management specialists, in the UK and Ireland. The original offering was in the deregulated services of telecommunications, electricity, gas and water. In 2005, the proprietary Total Cost of Purchase® approach was introduced. In the intervening years, additional services have been undertaken and now include general business costs.
Auditel’s strategic cost management relies on the continuous development of its business systems and analytical tools, to provide and maintain sustainable profit improvement for their clients, over 100 business costs. Their consultation is available for any organisation wanting to ensure that their ship is watertight.
Neil Ralph, Managing Partner of Rouse, the award-winning accountants, says: “It’s much more cost effective to engage external experts than for us to employ someone. In short, we view Auditel as part of the team.”
As to the future, over the next five years, Allison intends to uphold and strengthen Auditel’s market leadership in strategic cost management, build the network to 400 consultants and continue to become indispensable to their clients’ success.