James Caan is the newest dragon on the BBC television show Dragons’ Den. He
is chief executive of the private-equity firm Hamilton Bradshaw and has been
building and selling businesses since 1985 in various sectors.
I regard the human resource in business as being vital to success. However,
this does not mean that all else is secondary. Technology is opening up an
ever-broader range of options, creating the right environment in which to
increase productivity, reduce overheads and maintain profitability in an
increasingly competitive market.
Some options won’t suit some businesses, but it is important nonetheless to
embrace new technology to improve performance. Areas to consider might be
the introduction of flexible working, outsourcing or simply better time
management – all made possible by improved IT.
If you employ 50 to 100 staff, consider the savings that could be made by
introducing flexible working for 5%-10% of your employees. In return for
providing them with a laptop and broadband connection you will reduce the
cost of housing them in the building and the associated running costs. With
advanced communication systems, an employee can be physically relocated but
certainly not isolated in any way from the day-to-day operation of the
business.
This level of flexibility might give you access to a different spectrum of
employees, such as those who don’t wish to commute, or mothers returning to
work. Flexible working might also increase productivity by allowing people
to focus on specific projects, by improving time management and by generally
raising staff morale through a better work-life balance.
Outsourcing is a prime example of a technologically driven option to improve
the overall productivity of your business. Least-cost routing means that an
employee in India, Pakistan or the Philippines can be called at local rates
on a 0207 prefixed number – Lahore or London? In reality, does it matter?
I have used Greenwichbell, an outsourcing recruitment specialist, to fill 10
positions in Pakistan for one of the businesses in which I have invested.
Each person is paid £850 a month with no further rent, IT, phone or
stationery costs.
Now, compare this with the cost of an employee on the average salary in
Britain, including apportioned overheads at about £3,500 per month. The
cost-saving benefit is easy to calculate as £31,800 per year for each
outsourced employee – and I have 10 of them.
Whatever the perception of outsourcing, the cost savings are considerable and
hugely attractive to global companies such as Dell and GE, which outsource
10,000 and 18,000 jobs, respectively, to southern Asia.
However, I am not advocating the relocation of your whole operation. Rather,
that you identify any components of your business that may effectively be
outsourced and reap the benefits.
In addition to reducing costs by flexible working and outsourcing
possibilities, technology should be used to improve time management
throughout your business. Being able to remotely access e-mails on the move
is an example.
What is the first thing we all do when we arrive at the office in the morning?
We start by wading through our e-mails. The cost of providing an employee
with a Blackberry should be related to the most efficient use of his time.
If an employee on the average salary commutes by train every day for an hour
each way and is able to read and send e-mails during the journey, that
equates to 40 hours a month or about £500 of extra productivity against the
typical Blackberry cost of £15 a month. It is difficult to ignore such
savings.
As an investor in numerous businesses, I am able to use technology to increase
the cost-effective opportunities. To help one recent acquisition secure
customers all over the country, I established 10 virtual offices in leading
cities across the land.
Historically, I would have had to take on property, staff and significant
running costs in 10 locations to present the market with the same company
profile.
Today the use of virtual office facilities – a prestigious address with a
mail-forwarding service and exclusive telephone number with call/message
forwarding provided by a dedicated team – has created an immediate national
presence without high overheads.
When customers call to arrange a meeting they can simply be diverted to a
sales representative’s mobile phone, irrespective of location. A meeting is
then set up at the appropriate virtual office.
Using this technology to present a national – or even global – operation to
your customer base will cost as little as £100 a month for each virtual
office.
Compare this with the costs and time invested in running your “physical”
offices, where the only extra value gained is the ability to interact with
other employees – all other functions can now be serviced through technology.
Technology can also provide you with a huge shop window. We are all more
likely to enter a shop with an attractively dressed window, yet websites are
too often not maintained to the same standards. Your website needs to be
continually updated to keep it fresh, interesting and competitive.
Technology will also improve customer service and reduce response times, with
stock checks and order processing at the customer’s location, rather than
confirmations having to be sent back to a central office for processing.
There are challenging times ahead that will put pressure on profitability. We
should always be looking for ways to cut UK costs through the use of
technological tools, and today there are many possibilities for increasing
productivity and reducing operational costs.
Think creatively and consider your options, because as revenue streams fall so
too must your unproductive overheads.
