Standing Up a Cost Management Office

Challenge

The new COO of a large education non-profit annually serving over 7,000,000 students and their parents, 24,000 high schools, and 3,500 colleges wanted to evaluate costs across spend categories for the first time.

The COO needed to respond to concerns from the Board of Directors about high levels of spend across categories and a huge overall budget deficit, but the COO did not have the full time resources that could provide the required spend assessment.

Approach: Think + Do

We started by identifying cost savings opportunities by baselining current costs, highlighting wasteful and high spend areas, and then building business cases to assess the feasibility, necessary investment, and potential cost savings for each idea.

While the initial goal was to prioritize “quick-win” opportunities, we also worked with departments to suggest and scope out longer-term initiatives to increase efficiency, improve technology, and change policies to reduce the overall department’s cost structure. Meeting with category owners from every division across the company, we developed an inventory of over 150 specific publications savings ideas, and created an internal “best practices” checklist for departments to use in assessing their spend going forward.

Finally, we formed a company-wide organization focused on managing costs. Reporting directly to the COO, this Cost Management Office was tasked with identifying savings opportunities to close the overall budget deficit, and building a cost-minded culture across the company.

Results

In total, we identified potential cost savings of over $30 million, or 30% of the company’s overall budget. We provided a detailed roadmap that suggested the prioritization for executing each savings approach, and continued to support the company by executing against high-priority and quick-win savings opportunities.

Finally, we supported the hiring process for a continued internal Cost Management Office that would be managed internally, without the need for external consultants.