Tracking Total Cost – a Great Start to Growth

It is well known that lower costs increases profits and during ‘times like these’, cost-cutting is the play of the day, week, quarter, and year.  Of course!  East Coast Satellite Communications has participated in this trend, driving down cost as well and we are seeing the results of this work.  However, we have done it absent risk to our core business model.  We’ve held true and fast to our core values and to our ability to provide the finest client support anywhere.

The other day I met a client that has this same mantra; cut costs!  When I presented a plan that in fact will cut costs, I was most impressed that we then had a discussion about the TOTAL cost of implementing my proposal:

How much will it cost to pay the employees to swap out SIM cards?

How much will it cost to produce an Excel sheet of all their lines?

How much will it cost to track who has completed a SIM card swap and made the test calls to ensure the new SIM cards are working properly?

These activities may fall under the ‘that’s their job’ umbrella, but if employees are doing these types of low-value administrative tasks, they are NOT doing higher-value work that further benefit the company.  This was the first time I have heard this kind of discussion around cost containment.  This company was brilliant in their ability to look at the total cost, not just the dollar figure of the price proposal.

When buyers are looking only at the number on the bottom line things get interesting (and frequently expensive!).  The lowest price doesn’t create a good story and actually can often border on disaster.  I am aware of a satellite phone provider that sells at the lowest cost, however they are always in a precarious financial position, on the edge of collapse.  Would you use this as your provider?  In my view you risk everything when you engage this kind of supplier (for anything, not just Satcom) because you could be left with no satellite service when they file for bankruptcy.  Is that hassle worth it to save a few bucks (very few bucks)?  I say no way.  Lowest price shopping represents a very narrow-minded approach to buying goods and services and completely ignores  any value proposition.

This is why I was so impressed the other day – they ARE looking at the complete picture, all of the costs.  They are looking at the overall value of the proposal.  If you save $3,000 but it costs you $4,000 to implement, then what is the point?  They’ll need to analyze the scope of the project and projected costs and well they should.  Of course I offered that we would do most of the admin work so it increases the value for them.

That entire discussion is a great starting point and the notion must be perpetuated throughout the industry.  Only then will the Satcom proposition of anywhere communications grow and be fully understood.

Thanks for reading.

Lou Altman, CEO GlobaFone