Bob Zobel's job is running the internal finance function at XN Financial Services, a growing firm that creates specialized insurance products underwritten by Lloyd's of London. His hobby, though, is "turning over little rocks."

That the hobby is part of the job doesn't diminish Zobel's zeal for discovering what's under the pebbles. Nor does the fact that the booty amounts to minute cost savings that barely budge the cash needle, even though XN's revenue is just $80 million. "These are not big numbers," the CFO acknowledges. "But they get bigger when you add them up."

He takes a seat-of-the-pants approach, spotting potential savings in the course of his daily doings and travels. A favorite example, which involves cell-phone charges, "started with me but became a good deal for the company," he says.

Zobel, who began working for Boca Raton, Florida-based XN last year, visits the firm's Canadian arm in Montreal every other week for two or three days. After his first trip there, he was surprised that his Verizon bill for the month had doubled from its previous norm, because of international calling charges. He was surprised again when Verizon told him that for just a few dollars a month, his "anywhere minutes" plan could be expanded from just the United States to include Canada as well.

That got Zobel wondering how much more the company could save on phone bills. About 50 of XN's 75 employees make calls for which they are reimbursed. There is frequent travel not only to Canada, but also to London and elsewhere in Europe, where analog phones do not work. So employees without a BlackBerry or other digital device can easily ring up $100 to $150 a week in land-line charges.

Working with his IT director, Zobel reduced the number of cell-phone suppliers the company uses from three to two, signed up for country-specific plans in all of the firm's international business destinations, and bought BlackBerries for those who travel to Europe. He says he won't get his first read on savings until the end of XN's fiscal year on June 30, but expects they will have at least paid for the new gear. Going forward, with everyone properly equipped, the benefit will be several thousand dollars a year, he guesses.

Potential cost reductions can go unnoticed even when they stare you in the face. Zobel says he's proudest of a simple switch in hotels in Montreal that saved $75 a night. XN had a corporate deal with a small boutique hotel that satisfied his needs. But then came a time when he found out just before a trip that he had to extend his stay, and the boutique said it couldn't accommodate him. Since he didn't want to change hotels during the trip, he had his travel agent book him into another hotel.

That property, part of a major chain, is his new home away from home. It too satisfies his needs, and the savings amount to about $7,500 for the 100 or so nights Zobel alone spends there in a year. The best part, he adds, is that XN's board thought the story about the hotel change was "fabulous." Other employees are now being encouraged to look for their own travel cost savings. "If two people are going to the same city on the same day, take the same plane and share a cab," he says.

On the road or in the office, all savings are welcome, no matter how small. In March XN stopped spending $50 a month for big jugs of drinking water by investing $160 to install a high-quality filter for the kitchen tap. And the firm is saving a couple of hundred more dollars a month after trading in the big copier/scanner/fax machine it had leased for two smaller machines with fewer features.

"The reality is that we don't need six-color printing, and faxing four pages a minute is plenty fast," says Zobel.

A Drop in the Bucket
Like beauty, cost reductions are in the eye of the beholder. At ServisFirst Bank, a four-year-old Birmingham, Alabama, institution with $1.2 billion in assets, business-services provider Crowe Horwath LLP is winding up a two-month-long expense-benchmarking project. The bank's CFO, Bud Foshee, says he expects that less than $80,000 in potential savings will be identified.

He characterizes that level of savings as not terribly significant. "Anywhere money could be saved, they've looked at it and have found very few things," says Foshee. "This proves that we've done a pretty good job of controlling costs. When you grow as quickly as we have, you don't always watch your expenses. But I don't know of anything we could do right now that would save an awful lot of money."

The examination is covering more than 20 categories of noninterest expense, such as maintenance, office equipment, IT processing, printing, stationery, and check expense. Crowe Horwath will receive a percentage of identified savings, to be paid out over three years.

Foshee says that rather than being motivated by the recession, the project was prompted by a cost-control orientation the bank has had since it opened in 2005. A big part of that effort has been a preference for outsourcing whatever is possible, including internal audit, compliance, and managing the bank's core processing system. "We avoid investing in the people and equipment for those things, and it's worked out really well," he says.

Buyer-to-Seller Transformation
An entirely different type of response to cost pressures is taking shape in the Mayo Clinic's supply-chain organization.

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