With a recession possibly on the horizon and the fall-out from the terrorist attacks in the US and the collapse of Independent Insurance yet to be fully felt, it's time to take a long hard look at the business. The hunt should be on for inefficiencies that are draining cash and energy away from where it needs to be invested.

Perhaps the greatest source of inefficiency is the relationship between computer systems and paper records. No matter how hard we try, we can't get rid of paper completely - clients will insist on sending it to us. So while we can record the letters we send and refer to these at a desk, we still need to go to the filing cabinets and get the paper file if we want to know what a client told us.

In several companies I've visited in the past few months, there has been more than one method of filing in use in the same office. This comes about by not integrating the computer and filing systems after a purchase or merger, as the result of personal preferences or because the company has created an inefficient filing system. In one office, the files were kept on a different floor to the people using them. In another, staff spent five minutes locating a file by looking in the "outstanding" cabinet, the main cabinets and hunting through "to be filed" piles on people's desks. Not only did this waste time, but it boosted phone bills because of the need to call the client back.

None of these problems are going to be solved by buying a new computer system - that's like replacing a car's engine when all it needs is a service. The real solution comes from taking a long, hard look at everything you do and asking "can we do it cheaper or faster?"

There has to be a balance between lowering costs, keeping up staff morale and delivering customer service. But these are not mutually exclusive. Reducing costs is not cutting staff or hiring on minimum wage. Customer service improves if you can answer queries faster and more accurately. Morale will not fall if you keep staff involved in what is happening and sell it to them rather than use the "be glad you have a job" attitude adopted by some.

Ultimately, a computer system is only going to support the way you do business. If you want to reduce costs, you need to look at the business first.

  • Ross Hall is managing director of IT consultancy Garol. He can be contacted at ross.hall@garol.com.