Cost Reduction Without Cutting Capability
Overview
Our client had run three cost programmes in five years and the cost base was higher after each one.
Alain Le Coq
Chief Restructuring Officer / fairsystems
Across-the-board cuts are popular because they are easy to announce and require no analysis. They also reliably remove capability the business needs while leaving genuine waste untouched, which is why costs return. fairsystems was engaged by a professional services group to take cost out in a way that would actually stay out.
The Client
Our client is a business services group operating across advisory, outsourcing and managed services lines, built partly through acquisition. Each acquisition had arrived with its own support functions, its own systems and its own supplier relationships, and none had ever been fully integrated. Previous cost programmes had applied uniform percentage targets to every function, which the strongest functions absorbed by cutting genuinely productive activity while the duplicated overhead survived intact.
Roadmap
1
Assess
fairsystems built an activity-based view of the cost base, mapping spend to the work it funded and the outcome that work produced rather than to the department that booked it. Our consultants benchmarked each activity against both external comparators and the group's own best-performing business unit, which mattered because the internal variation was wider than the external gap. The analysis separated three genuinely different categories that previous programmes had treated identically: duplicated overhead from unintegrated acquisitions, activity that no longer served any current purpose, and productive capability that had simply been cut before because it was easy to cut.
2
Deliver
Our team designed a targeted programme rather than a uniform one. We consolidated duplicated support functions onto the group's strongest operating model, retired activity that analysis showed served no current purpose, and explicitly protected capability that previous rounds had damaged. fairsystems renegotiated the fragmented supplier base, where multiple entities had been buying the same services on unrelated terms. Critically, we built a cost governance framework that assigns ownership for each cost line to a named executive with a defined service level, so that reductions cannot quietly reverse once attention moves elsewhere.
3
Continue
fairsystems reviews the cost governance framework with the client quarterly, tracking whether reductions are holding and whether any protected capability is being eroded by drift. We support the integration of subsequent acquisitions so that new support functions are absorbed on the group operating model at the point of acquisition rather than becoming next year's duplication. Our consultants also coach the finance team on activity-based analysis so that future cost decisions are made against evidence rather than against a percentage target.
Solution Details
Uniform cuts do not reduce cost. They reduce capability and defer the problem.
Uniform percentage targets applied to every function
Deliverable: fairsystems replaced blanket targets with activity-based analysis, so reduction is aimed at duplication and obsolescence rather than spread evenly.
Duplicated support functions from unintegrated acquisitions
Deliverable: Our consultants consolidated support onto the group's strongest operating model, removing overhead that three previous programmes had left untouched.
Productive capability cut because it was easy to cut
Deliverable: We explicitly identified and protected the capability earlier rounds had damaged, and rebuilt the areas where the damage was affecting delivery.
Fragmented supplier base across acquired entities
Deliverable: fairsystems renegotiated consolidated terms where multiple entities had been buying identical services on unrelated contracts.
Internal performance variation wider than the external gap
Deliverable: Our team benchmarked against the group's own best unit as well as external comparators, setting targets that were demonstrably achievable internally.
Cost reductions quietly reversing after each programme
Deliverable: We built a governance framework assigning every cost line to a named executive with a defined service level, so drift is visible and owned.
Activity funded with no current business purpose
Deliverable: fairsystems traced spend to outcomes and retired activity that no longer served one, rather than reducing it proportionally.
Each new acquisition recreating the duplication
Deliverable: Our consultants built acquisition integration into the operating model, so support functions are absorbed at acquisition rather than accumulating.
Result:
The group took out a substantially larger share of cost than its three previous programmes combined, and this time the reduction held into the following year because every cost line has a named owner and a service level. Capability that earlier rounds had cut has been rebuilt where it was affecting delivery. Supplier terms are consolidated across entities, and the next acquisition will be integrated onto the group operating model rather than adding another layer of duplication.
0
Cost base reduction sustained
0
Duplicated support roles consolidated
0
Third-party spend reduction
0
Cost lines with named executive owner
0
Duplicate system spend reduction
Testimonials
How our services bring about success
Annika Nkosi
Lead Process Analyst
fairsystems’ team brought a unique combination of skills to our business assignment and was often sought out to tackle the most complex and integrated challenges.
Marie-Anne Badeaux
Programme Manager
fairsystems will challenge your thinking, provide you with alternative perspectives and, where appropriate, actively coach/mentor/advise you to generate and co-create solutions.
Justin J. Spratt
General Manager
Fairsystems consults impeccably to understand organizational needs and then brings innovative business relevant ideas and solutions to the table.
Mohamed Bin Naser
Chief Financial Officer
I am impressed with fairsystems’ team ability to grasp complex, accounting system problems and quickly find a simple, straightforward and affordable approach.
Ella-May Robinson
HR Manager
fairsystems has an incredible gift for making the complex appear simple and without being simplistic. It is a pleasure to work with them as they always deliver to an exceptionally high standard.
Jamal Aagha
Chief Executive Officer
There are some great companies in the media industry and the social space, but we have yet to see anyone take it to the level that we have with @fairsystems.
Allen Gibson
Operations Manager
The most valuable lesson we learned is that there are no shortcuts. Every minute we spent dissecting and learning was rewarded.
