CFO Innovation’s Cesar Bacani spoke to Edmund Lee, Partner, Advisory Services, at the audit firm, on what companies in Asia are doing and what they should consider doing in response to the global recession. Below are edited excerpts:  

 

Generally I think people are optimistic, but still very cautious, especially around discretionary spending. If they spend money for consultants or support, it’s got to be for something that they can realise the benefits from in the short term. Spending on longer term initiatives is being pushed to the back burner.

 

It depends on the purpose of the upgrade. The business may need certain functions that are available only in certain versions. Other reasons could be licensing and support issues. For example, the current software version may no longer be supported, so you are forced to upgrade. There are some situations where you upgrade because it provides a better migration path for the future; those upgrades might be delayed. But there are a few projects we’re seeing where the client says, OK, let’s just do it now, because it will reduce head count, or make a process more efficient, or because prices have come down in the short term.

 

CFOs today are leading the charge around cost management and I think the main reason is that they’re well-positioned in the organisation. They’re at the centre in terms of data availability and because of their role, they touch every part of the organisation. Basically, they would be in the middle of everything.  They are also able to work with different parts of the organisation to come up with what I call sustainable cost reduction approach.

 

For example, some companies have stopped authorising flights on business class and are requiring everybody to fly economy class. That’s fine, but it’s just a short term measure. When times are good, everybody will fly business class again. We’re looking for a more sustainable type of cost reduction, where you re-think the policy. For example, flight of less than eight hours, it’s economy class across the board. For longer travel, you fly business.  Alternatively, finance can help develop a business case for investment in video conferencing equipment.

 

You change the way you operate, therefore you need to change your underlying processes. And they can be about real simple things.

 

To give you an example, some companies are still using desktop laser printers to print their day-to-day documents. Actually, it’s more cost effective to use photocopiers as printers because the cost per sheet is a lot cheaper. I’ve seen some statistics and the savings can be more than 50% per page.

 

There will be some initial upfront costs because you will have to buy or lease the photocopiers and other accessories. However, there are some innovative arrangements with the large copier companies where they can ‘buy out’ all your existing printers on that basis you lease the copiers from them.