Cost structure: Three steps to sustainable and scalable change | Deloitte US | Consulting

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Three steps to sustainable and scalable change

Cost structure improvements

Creating sustainable and scalable improvements to a company’s cost structure involves three key actions: choosing or clearly defining the right business model, determining how decisions will be made, and mobilizing resources to put decisions into action. When improving their cost structure, many companies jump directly to action; however, the results are generally disappointing and, even if they are acceptable, usually hard to sustain.

Deloitte’s newly revised three-part series, Three steps to sustainable and scalable change, takes a detailed look at key activities necessary to produce cost structure improvements that can withstand the test of time.

Rethinking a company’s business model

Part one: “Rethinking a company’s business model” offers fresh and practical advice to help companies choose or confirm the right model. This provides a blueprint to guide the overall effort.

In part one of the series, the authors have introduced a “digital” dimension through which business models are being impacted and can be evaluated; and include updates to time-sensitive figures describing companies that have changed business models and the difference between SG&A cost averages for decentralized versus more integrated companies. They have added a new sidebar, “The digital enterprise: disruption to traditional business models,” describing the impact of technology on traditional business models, the disruption it’s creating, and how leaders can respond.

Aligning operational governance with the business model

Part two: “Aligning operational governance with the business model” presents a framework for aligning and improving the way decisions are made and executed. This provides the foundation for lasting improvement.

Three new themes have been included in part two of the series. The first, “Balancing forums to improve focus and effectiveness,” describes how companies can rebalance their forum portfolio to ensure focus on the right areas and to improve decision making. The second, “Designing forums to maximize value,” describes how proper forum design, including focusing on areas that drive value and using metrics, can improve forum effectiveness. The third addition, “Launching a forum or council,” describes the four steps leaders can take to properly and efficiently launch a new forum or council.

Redefining functional service delivery to achieve organizational scalability and efficiency

Part three: “Redefining functional service delivery to achieve organizational scalability and efficiency” explains ways companies can deploy their resources to create a cost structure and performance improvements that satisfy the specific needs of the business.

Revisions in part three of the series discuss how to determine a more optimal distribution of work for employees under a service delivery model framework, including the split between transactional and knowledge-based tasks, and the impact that work fragmentation can have on service delivery effectiveness. The new sidebar, “Global business services,” discusses some of the differences between global business services (GBS) and traditional shared services, common advantages of GBS, and how GBS is expected to evolve, including the impact of robotic process automation (RPA) and enabling analytics on shared services.

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