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Reduce Costs for All Stakeholders and Yourself

Jul 12, 2008
Most people work on reducing their organization's costs. Done properly, this kind of savings can reduce the need to raise prices and increase profits. Done improperly, you may only increase costs in another area.

If you can reduce costs for customers as the same time your costs go down, that's even better. Customers will be more loyal to you and will be more successful.

If such multiplier effects are possible, why stop at the customer in this search for lowering costs in ways that will benefit your company? Potentially, helping suppliers, partners, and end users can be even more valuable ways to reduce costs. That's exactly what Business Objects did with its business intelligence solutions.

Before Business Objects, it was difficult to extract information from large databases to find business growth and cost-reduction opportunities. Typically, the person with an information need had to work with a programmer and learn how to translate the business question into the phrases and structures that programmers use in order to get vital information from corporate systems.

Simple requests such as "show me product profitability by region, where profitability is less than x percent" can actually be quite complicated for a computer system to supply.

Business Objects changed all that by creating a patented "semantic layer" (basically a set of business terms that mean something to the business user, and shields them from the complexity of the underlying computer systems). The advantage here is that the business user with the business question now has a "self service" access to all the information she or he needs, when and where the information is needed.

Having done that effectively for a single company's data, Business Objects improved upon that business model by creating ways for suppliers, partners, designers, distributors, customers, and many end users to be able to make the same kinds of queries of each others' data. Naturally, this access only occurs when prior agreement to share information has occurred, and strong security is employed.

As a result, each person can enter the combined databases to find more ways to optimize the total cost solution. This kind of perceptual expansion will be standard in driving cost-reduction questions in the upcoming years.

Notice that each stakeholder now had an important incentive to tell other stakeholders about Business Objects. As a result, sales and profits expanded faster. As customers and other stakeholders became more successful, they could also afford to buy more software from Business Objects.

How can you create such a virtuous cycle of growth, cost reductions, and increased profitability?
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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