Examining Cost Reduction at the National Housing Finance Conference
Many organisations unintentionally focus resources on activities that have little impact on achieving their strategic goals, such as improving their financial strength.
They manage their business as if every operating factor were equally important. We call these factors value drivers and the key is to identify the vital ones that have the greatest financial impact.
Identifying, managing and optimising value drivers helps leaders focus their attention on activities that will have the greatest impact on achieving their strategic goals, enabling them to increase housing supply, improve their social impact, and maintain the quality of services and homes for customers.
I will be presenting on this topic at the March Housing Finance Conference alongside Glenn Harris, Chief Executive of Midland Heart, to examine this further and demonstrate how they achieved this.
So how do you identify these in practice?
There are many elements to the process, but some key steps include:
- Identify your value drivers across your organisation by looking at your service, its operating model, financial performance, costs for a given period and a clear understanding of customer needs.
- Use value stream analysis to start to identify the value drivers and calibrate your current performance levels using accurate data and cost information.
- Through a scratchpad financial modelling tool, you can model the linkages between the potential value drivers and your FFR and service area budgets continually refining them over time.
- When you are confident that you have between five and 10 possible value drivers, it’s time to test how controllable they are with the operational heads who manage the service and examine potential improvement ranges.
- Using sensitivity analysis through the scratchpad model you can scenario plan, establish performance targets and begin to see those few significant value drivers rise to the top.
Once you’re confident that your value drivers have been robustly defined, you can start to prioritise your resource planning, data, digital and transformation programmes onto managing and optimising financial performance.
We’ve seen this work in practice with our work with Midland Heart, who manage 33,000 homes, to generate over £8m of ongoing savings. I will be presenting at the March Housing Finance Conference alongside Glenn Harris, Chief Executive of Midland Heart, to demonstrate how they achieved this so come along and find out more!
Sign up in advance of the session, which will be held on day two of the conference at 11.50am on Thursday 21 March. If you can’t make it to the talk, you don’t need to miss out. Visit Vantage on stand 440 to demo the scratchpad modelling tool.