PwC says cost optimisation measures high on agenda for CFOs
PWC Middle East’s volume 1 of “Rethinking cost to drive value for your organisation” explores three (out of six) modern cost optimisation trends.
Together, they incorporate the use of emerging technologies and innovative solutions to not only cut cost but also provide other benefits.
Such benefits include time saving, risk mitigation, efficiency improvement, and employee and customer satisfaction. The report highlights the trends that can contribute to the cost optimisation agendas of modern day organisations. These include Robotic Process Automation (RPA), cloud solutions, and flexible working arrangements, shared services, big data analytics, and blockchain.
Beyond policy measures, most public sector organisations have been instructed to find ways to cut costs and rationalise spending.
The consequences extended to private sector companies as well, which in turn looked for ways to reduce costs and limit the damage already caused by the COVID-19 pandemic.
The measures taken by public and private sector organisations ranged from cancelling paid leave for some workers, to reducing salaries and terminating contracts.
“Cost optimisation provides an opportunity to reformulate an organisation’s strategy and revise its policies for a stronger growth and increased competitiveness,” said Dr Bashar El Jawhari, Partner, Consumer and Industrial Products and Services at PwC Middle East.
“Qatar, like others in the world, has been impacted by the consequences of the pandemic and the changes in oil prices. Governments in the region have taken several measures to reduce the impact of the crisis and have issued directives to public and semigovernment organisations to cut spending and improve efficiency.
“These directives were centred around transitioning to a leaner operating model and better utilisation of resources, all of which can be achieved with modern cost optimisation trends and technologies,” he added.
Traditional cost optimisation programmes are not always sustainable or impactful. More than 0 percent of such initiatives result in failures to achieve their targets, even leading to higher costs in the long run in some cases.
Large scale transformation projects have long timeframes, huge risks and cannot be considered as the holy grail to transform into an agile and digitally enabled business. Volume 2 of the series will expand on some of the challenges associated with these programmes.
Executives are shifting away from traditional cost reduction measures and embracing more innovative costsaving initiatives, blending technology and business process optimisation together to transform into more streamlined and lean organisations.
Technologies such as RPA and cloud computing, along with flexible business models have the potential to boost enterprise performance and increase efficiencies at a fraction of the cost of traditional approaches, which is why these trends are high on the agenda of most executives today and organisations around the world are investing in these technologies.
In addition to revealing the trends, the white paper examines how they can contribute to the cost optimisation agendas of modern day organisations.
RPA: Companies will see cost savings of more than 30 across key RPA-centric functions such as finance and accounting, human resources and supply chain, within the next one to two years.
Cloud-based solutions: While automation focuses on improving the performance of business processes to save time and costs, cloud-based solutions focus on the infrastructure on which these operations are built with the aim of making them more flexible and less expensive as well.
While cloud services can initially be more expensive than continuing to operate on-premise solutions, they become more economically viable over time. The research concludes that cloud solutions can save up to 55 in total cost of ownership within three years of their adoption.
Flexible working model: Flexible working is expected to have an even bigger impact on economies of the future. Other societal and environmental benefits include reduced traffic congestion and lower pollution levels as people make fewer trips to work which saves on fuel.
It also improves organisations’ disaster and emergency preparedness and business continuity planning, as work does not stop with an emergency in the workplace and employees continue to work remotely. In Volume 1 of the series, PwC presents a set of initiatives that harness technology and modern practical solutions that, if implemented in an effective manner, will contribute to achieving greater savings and reduce the challenges associated with such programmes. In Volume 2, PwC will shed the light on more of these modern solutions and look at some of the potential hurdles organisations face when implementing cost optimisation programmes.
Qatar, like others in the world, has been impacted by the consequences of the pandemic and the changes in oil prices. Governments in the region have taken several measures to reduce the impact of the crisis and have issued directives to public and semi-government organisations to cut spending and improve efficiency.. Dr Bashar El Jawhari, Partner, Consumer and Industrial Products and Services at PwC Middle East