Businesses now face unprecedented complexity and risk due to fast-changing market dynamics, shifting geopolitics and ongoing supply chain challenges. Uncertainty and disruption have become pervasive. In fact, the scope, scale and speed of change are creating existential threats to many organizations.
While no one can control externalities, every CFO has a central role in managing cost takeout and improving cost efficiency within the four walls of the business. Indeed, CFOs have an opportunity to step up as change leaders – taking bold steps to build resilience and agility. How? By treating cost efficiency not as a finite “initiative” but as an essential organizational capability in a world where the only constant is change.
When crafting a cost-efficiency strategy, finance leaders need to be both bold and balanced. A holistic approach requires careful assessment of which people, process and technology optimization levers to pull while addressing governance, controls and reporting.
Building cost-efficiency “muscle” is essential, but not easy. In fact, in a KPMG cost efficiency webcast survey, CFOs and other finance leaders identified some of their most persistent concerns and challenges.
Which cost-efficiency mindset does your organization struggle with the most?
What is your greatest concern with implementing a cost-efficiency program?
Six strategies for effective cost takeout
As you work to build cost efficiency as a capability, consider these six strategies for effective cost takeout. They are designed to support a leaner, more sustainable and more cost-efficient enterprise – without sacrificing capabilities.
Here’s where to focus:
- Real understanding of the business. Ensure leadership is aligned with the state of the business – with proper planning to prepare for and respond to future uncertainties.
- Clarity and knowledge. Have in-depth knowledge to identify root causes to gain good, clear visibility for realizing cost savings.
- Clear leadership and communication. Drive the tone and commitment throughout the organization to build buy-in and momentum.
- Behavior change. Focus on a cultural reset by embedding new ways of thinking and working into day-to-day behaviors. Doing so helps align control around costs.
- Fresh thinking. Having a growth mindset across the organization enables bold thinking and holistic decision-making.
- Rigorous implementation. Set up project management and key performance indicators (KPIs) to have strict controls of the program.
The six strategies work best with alignment – and effective communication – across functions and business units.
Forge a future-focused operating model
As you continue navigating uncertainty, keep working to expand oversight. That includes analyzing cost structures, designing cost-efficient programs, and quantifying the level of effort.
Consider ways of combining leading technology and outcome-driven transformation to enhance the value of the finance function across your enterprise. With a comprehensive, future-focused approach, you can emphasize business goals and quick wins. That helps drive cost takeout in the short term – while strengthening your cost-efficiency “muscles” over the longer term.
Build a more complete view of your opportunities and progress by addressing these six layers of the finance function:
- Governance – risk and internal controls for every process
- People – span of control, job definitions, skills mix and skills prioritization
- Functional process – process re-design and standardization
- Technology – integrations and automation
- Performance insights and data – standardizing KPIs and reporting
- Service delivery model – optimizing offshoring/outsourcing models
It’s a challenging and opportune time to be a CFO. Don’t fight the realities of change. Instead, embrace the moment. Step up as a change leader at the forefront of building resilient, sustainable and efficient businesses.
