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Help clients achieve cost reductions

As 2013 brings another year of low economic growth and the focus on ‘cost-cutting’ continues, Andrew Shaw, managing director of consulting firm Business Services Growth (BSG), shares some ideas on how security companies can help their clients achieve cost reductions, while also ensuring they continue to deliver service.

Given the continued pressure on the economy, we can assume that company and public sector clients will be under continued pressure to reduce costs this year. However, managers also have to balance this need with employees’ increasing demand for a safe and secure workplace at a time when security risks are often perceived as rising. There are also regulatory considerations that have to be met in business, which are also putting added pressure on the buyers of security services such as carbon footprint reduction.

Challenges and opportunities

This mix of customer priorities presents security providers with both challenges and opportunities. Challenges include more demanding customers, tighter margins, tougher competition and a greater risk of contracts being re-tendered. Conversely, though, this also gives rise to opportunities for new contracts, an increase in demand for integrated service contracts and the potential to use innovation to stand out from the crowd.

Security provider strategies

So, how can security companies overcome the challenges and capitalise on these opportunities? The answer lies in helping clients to find ways of delivering more with less. There are four main strategies that service providers can use to achieve this, and these are as follows:

Efficiency gains: It is vital for providers to operate as efficiently as possible against commercial contract terms. Suppliers should actively seek to improve labour productivity, streamline processes and improve resource management, while ensuring that any cost reductions do not compromise security.
• Technical innovation: Service providers need to look innovatively for ways to deliver better value for money. Replacing of manned guarding with remote monitoring is a widely-used method of implementing technology to reduce costs. However, there are also many other technology-based solutions that can be used to reduce costs whilst also improving security. These might include anti-theft devices, access control technologies, e-learning and security management solutions.
• Scale economies: Service providers need to work with customers to integrate security services that will deliver economies of scale. This doesn’t just apply to the larger firms. Smaller providers can achieve the same effect through partnerships, as demonstrated by the innovative partnership programme that Derwent FM used to win government document storage contracts last year. From a customer’s perspective, consolidating security into a single vendor contract can improve security too.
• Performance-based contracts: Service providers can help clients achieve more cost-effective contracts by offering performance-based contracts that enable the sharing of any cost efficiencies gained. However, organisations must also be careful to reward performance on a balance of inputs such as timekeeping, attendance and response times, as well as outputs such as achievement of customer satisfaction scores, minimisation of complaints and incident outcomes.
Making it happen

Depending on the nature and breadth of a security provider’s business, delivery of these strategies could well require investment in new capabilities. Our experience within this and other sectors shows that improvements may be needed in areas such as:

1. Developing a ‘business excellence function’, responsible for helping contract managers and their clients to identify and implement operational improvements.
2. Providing extra sales capacity to support contract managers in developing new relationships with existing clients.
3. Developing ‘trusted advisor’ client relationships to enable more open, or ‘two-way’, communication.
4. Building an independent product development team responsible for collating client needs, identifying innovative solutions and developing these into scalable solutions.
5. Investing in IT solutions, in areas such as performance reporting, help desk and workforce management systems.
6. Developing an active partnership programme to identify and manage partners more proactively.

Is it worth the investment?

There are many changes that security providers need to make to help them deliver greater value for money – eg. a greater focus on outcomes rather than on specified delivery processes, openness to commercial contracts in the public sector and changes to procurement policies. Nevertheless, the strategies outlined above are “customer facing” investments that service providers can make, which will provide long-term benefits of better contract performance, longer term contracts, higher retention rates and ultimately, better value for money. The prize will be great for those willing and able to rise to the challenge.

Business Services Growth is a business consulting firm specialising in accelerating profitable growth for clients in the Business Services sector. For more information visit: www.BusinessServicesGrowth.com


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