IT Cost Reduction

IT Cost Reduction in Financial Services


Our client – 11,000 employees, T/O £1bn – is an International Insurance broker. Their operations cover commercial brokering in Europe, Asia and USA. Insurance services cover a broad range of corporate assets, including buildings, airlines and shipping plus corporate liability for employees, products and customer services. The business is organised around service lines to its customers with core support activities being centralised in the UK and USA.
The industry has been the subject of consolidation, with competitive pressures on margin and a search for competitive advantage.
Our client was concerned with the size of the central support costs and more specifically about the escalating cost of IT and the inability to control legacy system costs.

Consulting Assignment

Our client asked us to help them to reduce the cost of IT, gain control of the IT division and to help them improve their service.

Key Project Activities

Managerial Control/Operational Control

Implemented performance management principles. Linked departmental and individual objectives to group objectives. Established regular plan do review cycle at various operating levels. Introduced performance monitoring and measurement. Created all important linkages between operational decisions/control and financial outcomes/control

Financial Control

Cost Analysis – Detailed activity based cost analysis completed, linking cost to service delivered.
Financial Awareness – Established financial accountability at operating management level
Zero Based Budget – Established principles of ZBB and facilitated the preparation of the 2001/2002 on the new basis
Billing System – Introduced new intra company charging system for IT services clearly delineating cost of service
Benchmarking – Introduced Cost of service benchmarking with external alternative IT providers

Value for Money

Eliminated non value-add activities.
Reengineered operational processes to improve efficiency and reduce cost
Compared internal and external costs of service. Prepared detailed plans for insourcing 20% of the key service activities (associated savings = 25% of budgeted cost)

Organisational Control

Re-organised the division around the newly established operational processes

Client Benefits The main client benefits were: