Enterprise Cost Reduction
The effects of the credit crunch, and stalling income growth from the deterioration of market conditions, are increasingly forcing financial services institutions to reconsider their cost positions. Whilst most senior executives recognise that there is scope for cost savings within their organisations, it is often harder to visualise how these savings can be realised.
A sustainable approach to cost reduction
The key challenge is how to take a strategic approach and create a low cost and effective operating model that will deliver sizeable and sustainable benefits and enable the delivery of corporate strategy.
Certainly, the imperative for cost cutting is undeniable: over the next two-to-five years the following factors will continue to challenge financial institutions:
- Top-line growth will be difficult, emphasising the value of cost control as a means to stabilise performance and provide shareholder value;
- Continued overcapacity in financial services will likely precipitate further consolidation; and
- The new regulatory landscape and Government intervention will increase overall costs.
The Deloitte approach to Enterprise Cost Reduction
A strategy, not a tactic
At Deloitte we believe that effective cost reduction is not a quick fix solution to a short-term problem, but must be viewed as a core strategic capability which successful companies need to embed into their structure and culture. Cost-reduction should be a systematic tool for driving performance improvement and generating shareholder value. Rather than simply seeking savings by function, effective cost-reduction requires a fundamental approach – challenging the organisation to reconsider from first principles exactly how they do business. It must encompass the entire cost-base, not just individual functions – taking an enterprise wide approach, driven from the top.
Ten of the best – Cutting for growth
At Deloitte, our capacity to deliver across the full scope of cost reduction programmes – from strategy to execution – sets us apart and we have an established a reputation for designing and implementing cost savings that deliver sustainable result for our clients.
It is precisely this extensive experience in designing and delivering Cost Reduction Programmes has led us to identify ten conditions which, when taken together and applied thoughtfully, can significantly increase the chances of delivering a sustainable, cost reduction programme with strategic benefits.
To read more about our ten steps to a sustainable cost reduction programme, download our publication Focused on the fundamentals: A sustainable approach to cost reduction
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