Connected Cost Management: how to leverage technology to reduce costs and grow faster

To enable growth in uncertain economic conditions, across-the-board cost cutting just isn’t going to cut it – as this approach fails to support necessary growth mechanisms. The solution chosen by successful organizations aligns cost reduction measures with company goals and growth objectives, often through technology, freeing up budget in a sustainable way to fund market positioning initiatives. But where should you begin?

Lock in operational superiority – starting from the customer

Our CCM approach begins by identifying costs associated with capabilities that give an organization its unique competitive advantages, with activities needed to compete in its sector, and with activities required for standard corporate operations.

Some key questions to consider:

• Do you have a comprehensive overview of your company’s operational processes, activities and costs?
• Do you know where you can rapidly reduce costs without impeding your growth capacity?
• Will potential measures enhance effectiveness, profit margins and cash flow without impacting the customer experience?

The starting point for operational superiority is a thorough analysis of customer-facing processes that progresses methodically backwards through operational processes.

Focus lies on the use of data and analytics to prioritize and customize cost reductions so that they align with and support long-term success. delaware’s CCM approach rationalizes, simplifies, and automates a company’s operational capabilities to drive margin and cash-flow improvement, identifying both quick wins as well as sustained cost-management opportunities in the areas of production, customer service, back office and beyond. The goal? Ensuring that each operational process step adds value for the customer and the business.

The process involves investment in operational excellence, process automation, and technologies that permanently embed the gains made in efficiency and effectiveness – which contrasts with the route that most businesses take: across-the-board cuts for short-term benefits.

An example:

Implement zero-base budgeting (ZBB)

To lock in the efficiency gains achieved through operational superiority, zero-base budgeting (ZBB) is a valuable, logical add-on process to CCM. ZBB allows organizations to manage costs in a sustainable way and ensure that the appropriate budget is allocated to the activities required to operate, compete, and most importantly, to differentiate.

In ZBB, budget owners take a bottom-up budgeting approach by business function, starting from zero. Differentiating capabilities should be budgeted to support growth objectives. All zero-based budgets should include the impacts of planned projects as well as compliance with policies and guidelines.

Sessions are then held with budget owners and business stakeholders in charge of implementation to adapt detailed savings opportunities and align on the final budget.

Transform pain points into opportunities

We offer a range of technological solutions and tools to support cost identification, allocation, budgeting, and tracking process, and our CCM approach is tailored to each company’s unique circumstances. Actions range from curbing excessive consumption, streamlining procurement expenses, automating repetitive manual processes, enhancing working capital and eliminating redundancy across different functions, to improving production efficiency by digitizing. We take all factors into account when we help businesses priorities their actions – including financial impact, likelihood of success and ease of execution.

Any long-lasting transformation requires a holistic approach combining technology, process and organizational elements. We make sure to include these three dimensions in our recommendations.

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In addition to these technologies, delaware also offers diagnostic tools to facilitate identification and valuation of possible actions in a company’s unique CCM implementation roadmap. With these accelerators, we can deliver a custom-made roadmap within a few weeks.