Optimising financial processes

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Cost Savings Back at Number One, How Do We Respond?

It is often said that winning businesses grow revenues and cut costs faster than their peers.

There is definitely a renewed focus on cost efficiencies.

82% of executives state that margin improvement or protection is a high or critical priority.

Unsurprising given the global economic landscape with soft growth, volatile consumer demand, stubborn interest rates & inflation, supply chain challenges and geopolitical instability.

As they search for savings, leaders are looking at the SG&A line in the P&L and turn to Global Business Services (GBS), Shared Services leaders and the CIO to drive efficiencies at scale through process improvements, automation, labour arbitrage and more.

Quick wins are the order of the day.

Our friends at SSON Research & Analytics recently shared a survey that found 88% of shared service and GBS leaders confirm their number one priority for 2024 to be cost efficiency. 

The Hackett Group also address this topic head on.

“Performance leaders run at a 29% lower general and administrative cost than the peer group. For a typical $10 billion organization, this represents a $110 million cost advantage across business functions. They deliver 9% year-over-year operating cost improvement”.

But aspiration, execution and outcomes are very different things.

Many times the “spirit is willing but the flesh is weak”.

What separates the winners in delivering rapid cost efficiencies from the pack?

They have a clear strategy;

  1. They apply the Pareto Principle (80/20 rule) for quick wins that deliver 80% or more of the economic benefit for 20% or less of the cost, effort and cycle time. They instil the discipline of 100 Day Plans for these activities and an expectation of continuous improvement. They reinforce focus and achievement with a Savings Tracker for each 100 Day Plan.
  2. They think “end to end“, not in silos. The fastest impact comes from elimination of unnecessary activities or categories of activity. This requires cross functional collaboration based on trust. They understand the various journeys that stakeholders have to take through processes. They challenge the status quo and eliminate the irrelevant. They simplify and harmonise before they digitise.
  3. They ensure their teams’ objectives and KPIs encourage and enforce the right economic outcomes.
  4. They review and revise non-negotiable policies.
  5. They focus on customer experience.
  6. They get master data under control, especially in the revenue and spend cycles (customer and vendor).
  7. They employ defectivity as their weapon of choice for continuous process improvement. They hunt down the process defects, analyse quickly and eliminate.

You can access the SSON Research & Analytics “state of the industry” survey here . . . .

You can read The Hackett Group “2024 GBS Agenda” here . . .

Don’t hesitate to get those 100 Day Plans in place. We are already 1/8th of the way through 2024 . . .

Thanks for reading . . .