Cost efficiency is important both in good times and bad. When business is slow, enterprise cost management can help increase your savings and help generate the cash and liquidity you need to survive. When business is booming, it can provide a scalable cost base that can help increase profitability and can allow you to grow aggressively through hiring new talent, acquiring new businesses and pursuing new market opportunities.
Our comprehensive and time-tested approach is designed to help you in your efforts to design a cost structure that fits your business strategy and goals. And we believe our unmatched access to capabilities in Tax, Finance, Accounting and Technology Integration can help you in your efforts to identify savings opportunities that other firms might miss.
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Many companies treat all forms of cost reduction as the same, which is one reason they often end up implementing across-the-board cuts that fall short of meeting their needs, or in some cases even do more harm than good.
To get the most value from enterprise cost management, start by understanding where your business falls on the “health-to-distress” continuum, and then choose the appropriate course of action. Companies that are doing well can focus on preserving their cost discipline and continuing to push for continuous improvement or targeted savings in selected functions – especially in administrative and support activities. On the other hand, companies in distress may need to pursue broader cost reduction or strategic restructuring – transforming their business models, operating models, or capital models to reduce and align their cost structures with changing business conditions and the realities of their current situation.
Take a good look in the mirror. Be honest about your company’s place on the health-to-distress continuum, and its future outlook. Honestly assess your past attempts at cost management. Did you blindly implement across-the-board cuts? Or did you push for structural changes that were meaningful and sustainable? Do you need to redefine your business model or cost structure to take your company to the next level? Does your current leadership team have what it takes to make the tough choices?
Choose an approach that fits your specific situation. Where is your market headed, and what are the keys to sustainable value? Have you considered a range of scenarios? Do you have a plan to fill critical gaps in your capabilities? What investments are necessary in people, technology, brands, and markets? Will continuous improvement meet your expectations or do you need a broader approach?
Focus on execution. Strong leadership and a disciplined, practical approach are essential. How will you communicate your priorities to the organization? Do you have the necessary tools to monitor and report progress against stated goals? How will you maintain alignment through the organization? Are you properly framing the effort as a springboard to reposition the company for future success?
Principal, Deloitte Consulting LLP