Cost Effective Opportunities to Support Strategic Growth
When emerging from a financial crisis, executives must consider the ability of a scaled-back organization to execute strategic growth. They will ponder how to transition the business from plateau to growth mode, all while being cost-conservative. This is where cost transformation via the operating model comes in.
To help executives prepare for the shift from survival to advancement, we have outlined what should be considered in order to simplify operations that would enable cost-effective support of strategic growth objectives.
Aligning People to Strategic Objectives
Having the right people in place is the first step to success. As an organization determines their future goals and objectives for recovery and growth, they should look at the skill sets and talent already on board to determine if realignment is necessary. Asking existing employees to take on more responsibilities may help in the short-term, but it is not a viable or mature long-term solution. It is critical to recognize the most important skills needed, identify who already possesses them, and where there are gaps among the current workforce. From there, executives can develop a plan for training, hiring, and development, which are the most efficient and cost-effective ways to close crucial gaps and meet the needs of new growth objectives and business realities.
Advancing Processes Through Optimization and Automation
During a crisis, organizations may execute processes – such as a virtual quarter-end close – with limited staff or under abnormal conditions. As they emerge to drive towards a new normal or growth mindset, it will be key to assess the business processes for efficiency, standardization, and opportunities for automation. The highest transaction volume processes, such as procure-to-pay, should be reviewed first. These typically utilize the most resources and time and require the highest levels of interaction and intervention by management. They are also the best places to drive cost out of the organization by automating manual processes, integrating rules-based approvals, and implementing technology improvements. Keep the focus on building capacity through automation and ongoing process improvement.
Optimizing Technology to Bolster Productivity and Better Decision-Making
Understanding the technology landscape provides leadership visibility into another cost optimization opportunity. Companies should review their technology stack through system diagrams in order to evaluate the tools that they have implemented, and the costs required to operate and maintain them. As companies review their technology, they should ask the following questions:
- Are the right tools in place to support the highest volume transactions?
- Are there tools that are on outdated platforms and require high levels of intervention by IT or finance?
- Are there tools that could be improved by enhancing integrations?
- Are there tools or modules in place that are not being utilized?
Organizations will often shy away from evaluating their technology platforms because the inevitable conclusion may be to incur the cost and effort of implementing new solutions or updating the ones in place. Companies should consider a total cost of ownership analysis before making decisions and engage a referenced and knowledgeable systems strategy firm to help evaluate their options. Most organizations find that these evaluations result in savings that cover any costs for executing the projects.
Regardless of the decision to engage in a detailed analysis, companies should look for ways to modernize their technology platforms, remove solutions that are not being utilized, or drive towards a standardization of tools to reduce duplication. All of these activities will support cost transformation efforts and enable the organization to be ready for future growth.
Reevaluating your business’s people, processes, and technology can appear daunting, but it is vital to understand the ability of organizations to evolve, maintain a new normal, and emerge stronger. Taking the time to evaluate the current environment will protect the business in the long run, and lead to greater success.
Our latest guidebook provides leaders with a roadmap to enhance resiliency plans, simplify operations, address new financial requirements, and more. To download, please click the link below.