Deep Dive into Cost Optimization (Ryan Olson)

Full transcript

Welcome back to the podcast, guys. Today we are joined by Ryan Olsen, a consulting partner at Era Group, where he helps companies improve profitability through cost optimization and supplier management. Ryan, welcome to the podcast. >> Thank you. Yeah, excited to be here. Thanks for having me. >> To start, I'd love to focus on your journey to Era Group. Could you share something about that? Yeah. So I joined ERA group about 10 months ago, maybe a little less actually. Uh prior to that I was at Intel Corporation. I led teams in partner programs, business development with other companies and did that for g 23 years now. Intel as as you may or may not know has gone through some struggles lately and so they went through multiple rounds of layoffs. It ended up I got hit twice. So got laid off once and after six or seven months I got hired back on basically to the exact same job.

I had just been reorgan organized to a different group within the organization but leading the exact same team doing the same work but they paid me more. So I was like okay yeah I'll come back. I hadn't found anything else yet and the job market is it's kind of rough out there and so I was happy to go back. then, you know, was there for just just over a year and knew cuts were coming again and they were going to be big ones. I thought, hey, it got he got hit last time. I'm probably going to get hit again or might get hit. So, I started exploring, I mean, obviously doing the job search, but exploring other options. So, one of the things I started looking at was potentially buying a business, whether it was its own business, whether it was a franchise. I look at different franchise options.

I'd always wanted to own a business at at some point, but got into corporate life and that treated me well over the years. But anyway, started looking at these franchises, looked at different options. There were, you know, did a deep dive on three or four different ones. The first ones I was looking at weren't necessarily a great fit for me and what I wanted to do. And by this point, I had been cut again along with my entire team. So, there was no team there to lead. That's when I found a group. Now, what really attracted me to ERA Group was that the focus that we take with our clients is that we focus on costs and we help them reduce those costs. And so, after being cut from a position twice in the previous two years, this really resonated with me cuz it's the the approach of, hey, let's help companies cut their costs and not their people. And so, that was something that I was like, okay, that's something I can do. I I like that I can get get excited about it. Plus it does a lot of other things too.

There's the opportunity one really help other companies help people. It's a very relationshipdriven business and engagement. That was something I always enjoyed in the work that I did. I did account management of software companies and other technology companies with Intel and would work with them to improve their products and help their business grow. And that was something that always, you know, I really enjoyed which is again why I did it for over 20 years. And so now with a group I got to continue doing that just in a little bit different way but a way that I think is even more impactful for the companies that I I get to work with. >> And when it comes to your previous experience at Intel, what were your day-to-day things that you are actually doing for them? >> Yeah, so you know it kind of changed throughout the years. Obviously, when I first started, we were basically account managers.

And so, it's kind of a almost an inside sales team motion, do a lot of phone calls, uh, a lot of emails, and we'd have a certain group of accounts that we would cover. So, I started covering some gaming accounts that were in the software partner program, which was a lot of fun cuz I'm working with companies making video games. That was awesome. And then kind of adjusted as I grew within my role within Intel. I went from that which was you know day-to-day or just sitting in the office making phone calls sending out emails you know following up trying to get these partners access to the latest technologies and help them get that integrated into their software. The whole idea was when they're using the latest technology, their customers when they buy their software, it works best on Intel's and so it kind of creates a pull motion, right?

And so we were helping to kind of create the markets for the new technologies, the new products that were being released. Then I took on a role program engineer, but I ended up traveling around the country and training the companies and partners in person on these new technologies and how how to incorporate them into their sales motion and how to use those. So I got to travel all around the country and train a lot of a lot of partners which was a lot of fun. Then I while I was doing that I had gone back to school and finished an MBA and then I got to lead a team and so I was leading a team of those inside account managers and so again the day-to-day kind of shifted quite a bit during these different roles. Now, as I'm leading a team, there's a lot more training and employee development and all the the leadership and management things that you need to do as a kind of a frontline supervisor. Um, I had my team covered the Americas and then after doing that for a while, I took over our worldwide team.

And so, again, day-to-day shifted again. Now, instead of managing reps who were kind of doing the work, now I was managing managers. Had like six teams from around the world. We had probably 60 people total on the team. got to travel internationally. We had people in in Europe and Asia and Latin America and throughout the the US. So anyway, got to go travel, which was awesome. And then I had the opportunity to kind of step up into kind of the next level and go into program management, which still was over the team, but now I was engaging more with internal stakeholders and planning out the strategy for what we were doing. Not just executing, but now deciding on strategy. And so again, each of these things kind of added more, you know, to the job, you know, and bringing everything along. It was it was great. I guess the traditional kind of corporate ladder, right? Kind of kept stepping up, which was great. Most of it obviously the last, you know, four or five years is all virtual as well. And it worked really well cuz my teams were all around the world.

So that's how I'd been doing it for years prior to to the COVID lockdown and everything going virtual. You know, we had done that. So that wasn't too big of a change. I just didn't drive into the office to get on my meetings, just stay stay at home. And so, but other than that, it was about the same. So, that was that was nice. >> When you explain what you do to a business leader, what's the simplest way you actually frame the value and what kinds of cost areas tend to be, let's say, the hidden savings that people normally don't see. So the way I usually explain it is say that I am a cost intelligence and optimization consultant which sounds kind of fancy but when you break it down it's really I help companies understand where they're spending their money and how to spend less of it basically how to save those and save those expenses and the different cost categories.

So that's one thing that I really like with ERA is we look across consistently 50 to 60 or more different cost categories. You know, we just did a recent audit and found we've we've done over a hundred in the last few years. You know, one thing though that's nice is that then we can support almost any type of company. Like I said, we don't look at people, but all the other cost categories are things that we can support. So everything from insurance both like company insurance and employee benefit insurance to waste management to office supplies, shipping, logistics, merchant card processing, banking fees, like all these different areas. And so really no matter the type of company, we can find at least two or three different categories where we can really help them out. And as you are building this kind of momentum, what's been your most reliable way to actually create these highquality conversations with the right decision makers? >> I've tried various ways. The best way I've had so far is really through networking.

So I've been doing a lot of networking and going to events and different meetings and things and connecting in that gives you a chance to connect with people. Really the other thing with ERA is we work on a success-based contingency model where we bill for our clients based on what we are able to do. We share in the savings that we're able to generate. So if we can't find any savings there's no fee. So because of that then you know a lot of people ask a lot of times like well then why doesn't everybody want to use you? I'm like I know why not but but and so really it's it's that opportunity to engage and start to build a relationship with people. And then I found that, you know, those I'm talking to, if they have a referral, then that brings that trusted relationship that I've built with that person and it basically kind of transfers it to whoever they're they're referring to me. So throughout ERA Group, all the different franchise owners out there and franchises, you know, across the board, we get probably 85% of our new clients come through referrals. And so building those relationships and nurturing those is really where I found the best return to engage with potential clients and and other referral partners.

>> I assume that cost optimization can be sensitive because people worry about cutting the costs too deep or just disrupting the suppliers. What are the most common objections you hear and how do you like overcome them? We look at our biggest competition as the status quo. You know, a lot of companies, they're they're doing okay. And so, they don't have a pressing need. They don't feel that pain of, "Oh, we really got to cut cost, right? Everybody knows, oh yeah, it's a good idea. We should spend less." But, you know, is there enough motivation for them to really make an effort to look at that? Now, a few things that we do to overcome that. Like you say, there is there is some trust involved because when you start talking about finances, even expenses, there can be sensitive data in there, you know, and so we do make sure we get an NDA in place so that all the data is protected. We use secure portals to share data and all of that. We like to engage with prospects.

We call it a cost intelligence analysis or spend view. So it gives them a view into their spend. And we do this analysis and it's complimentary when they're working with us. and we use it to look at their spend over the last year, which can give us a lot of insight into how they're spending their money and what areas they can focus their efforts on to really make a difference as they're cutting costs. That's where we kind of provide our insights and our approach and show them, hey, here's where you're spending your money. Here's all the different categories. We break it down for them. here's all your vendors, you know, so you get a look of your supply chain, if there's any seasonality or differences by location. And then we bucket those expenses and we say, "Hey, here's we kind of do the quadrant, right?

Here's the ones where we know we can help you. Here's the ones where you can probably do it on your own because that's kind of more key to your business." And so you probably have the the internal resources to do that. And then we we identify also the ones that where we don't usually find savings. And then the ones that are probably too small to where you can probably find some savings, but it's not going to move the needle for you. And you know, we provide that back and our clients or potential clients, they can take that and they can go do their own. So that's always one thing we like to make sure we discuss with them before they sign on as a as a client is, okay, you know, why don't you just do this on your own? And really with a lot of people, one, they don't have the bandwidth, right? They're all just doing their day-to-day. And you know in a lot of those areas they don't have the expertise to be able to identify where those hidden savings are in a lot of these different cost categories.

It takes decades right to really develop the expertise needed to really make a difference in in some of those areas. Now not every area is like that but it they all do take some time and that isn't always available. >> Use AI in the job that you do. >> Yeah we are working and developing AI tools that we we can leverage. We use some internally. We don't we don't have anything external available yet, but yes, we have over 30 years worth of projects and data. We think we've done 30,000 projects across 60 different countries over the years. We have up to $18 billion dollar uh in spend that we're analyzing and and reviewing and trying to and finding savings for. And so we have a lot of data and a lot of knowledge. And that's one thing in this spend view assessment that we do where we leverage all that knowledge that we have as we look at these spends to help identify and as part of that assessment we we put out hey on average here's what we expect to find. Here's what we think we can find you as far as savings. We do a annual basis out to 5 years on their projections.

But again that's the averages and no company is average. Every company is different and we don't get into the real deep level engagement until we sign our client agreement. And once we do that, the first step of what we do in our in all our client agreements is we do a deep dive to understand what's the current baseline. Like you said, those supply chains, vendor relationships, those are important. We don't want to create issues there. And so we do that deep dive. We want to understand what is your supply chain look like? Who are all the all your vendors? What contracts do you have in place? What's the relationship like? you know, who are maybe your key players? We really dig in and really understand that kind of a a baseline of here's the situation in that that specific cost category before we go out. But we need to understand really detailed what the situation is before we can go out and find realistic savings. We don't want to go just, oh yeah, cut the quality of everything and you're going to save money because that's that's not sustainable. That's not a good long-term practice.

You know, we we always look for equal or if not better quality in the solutions we find for our clients. And >> Brian, if we fast forward a year, what would a great year look like for you? >> Yeah. So, a great year, I would love to add probably a client every every two or three months, a new client that I'm supporting up my business. And by that point, a year out. One of the challenges with uh our model is we do a lot of work upfront before we ever get paid anything, which can be great. It's great for the clients and long-term it's actually a great model, but the struggle comes in in the in the beginning especially cuz you're doing a lot of work, but you're not making any money. And because we bill based off actual realized savings, not just some there are a lot of consulting companies out there that hey, you know, as soon as we give you a report, we charge all the money and and you know, now it's whatever. But we do a ton of deep dive work.

We find and identify savings. We help with implementation. And then once we start seeing those realized savings, that's when we start building because then we know to build. It's, you know, contingent based on the the success that we have. And it's rough cuz you're doing a lot of work, but you're not making money. You're building something, which I know there's a lot of businesses out there like that that take a while to build and start to to generate revenue built into that model. Even when you sign a client, on average, it's probably anywhere from 3 to 12 months before you make any money off, you know, with that client because we need to generate savings for them before because that's where our fees come from is from those generated savings, right? And that increased cash flow that we're able to create for our clients. What's one advice that you would give for a person that may be in the same industry as you?

>> Yeah. So, I think a big thing I've learned is really it's the people, focus on the relationship and start to engage, make connections, even there's no value for you. It's like that's one thing I've done a lot now as as I'm networking is meet a ton of people and sometimes can help. there's an immediate value back and forth but a lot of other time there's not really any immediate value but I always like to look well how can I help sometimes I find people and it's like it's clear how they could help me right cuz hey if you know anybody give me a referral but how how I can help them like I work with various groups like since I was at Intel I'm a chair for the Intel alumni network which is a nonprofit group that just keeps all the people used to work at Intel keeps them connected and so sometimes I can get people in front of that group do work for some community colleges around here, do some teaching and things.

And I've able to been able to connect companies in with the community colleges where they didn't have that relationship before and start to identify potential new hires or interns or different things like that. And so I'm always trying to see whether it leads to business for me or not, but see where I can make connections and add value. And so I think that approach I have faith that it will come back and and help overall, right? There may be things that I'm doing that aren't immediately, you know, driving an immediate financial impact, but I think overall it's building those relationships and and helping where you can that really make a big difference. >> Yeah, exactly. Or it's kind of had recommended to me a couple months ago and read the book. It's called the go- giver, but it's kind of that approach where, hey, go out and give and you're going to get stuff back, right? It might not be how exactly you want it or or were expecting it necessarily, but it's going to be better than you were anticipating. So, I like that approach and that's how I try and engage with others and in my networking whenever I can.

>> Awesome. Well, Ryan, thanks again for being the host for today's episode. I will add links so people can connect if they want. And thank you guys for watching. >> Yeah, thank you. Thanks for having me. This was fun. And I appreciate it.