Nordic companies aim high in reducing costs – but often fail
Deloitte’s 2019 Global Cost Survey – Nordic trends
With the economy balancing, cost-management remains a strong imperative around the world. Companies continue to have positive expectations for revenue growth, with many reducing costs to allow necessary growth. At the same time, more businesses recognise the need to manage costs in order to transform, by investing in key digital innovations.
Nordic companies stand out in aiming high when they take action on cost reductions, but they also fail to meet goals more often than others. Previously lagging behind in breakthrough technologies, the Nordics now seem to take the lead.
Moving towards a save-to-transform mindset
Cost-reduction continues to be a standard business practice in all regions. Cost programs are less common in the Nordics than in US and globally, but here companies aim higher when they take action on cost reductions – followed by a higher failure rate. At the same time, Nordic companies have less positive expectations for revenue growth.
More and more, businesses are recognizing the need to transform their operations and capabilities with infrastructure investments in key digital innovations such as robotic process automation, cognitive technologies, business intelligence, and cloud based ERP systems – shifting from a save-to-grow to a save-to-transform mindset. Nordic companies have been lagging behind average levels of new technology implementation. However, this is a key strategic priority for the next 24 months.
About the survey
Deloitte's Cost-management survey aims to understand factors, approaches, actions and targets relating to cost initiatives. In April 2019 a new global survey was released, containing data from more than 1,200 senior executives across all major global regions and industries. Now, with this report, we share a Nordic cut from this data, highlighting where and how the Nordic cost-management initiatives differ from other areas.
Key findings – Cost Management trends in the Nordics
- Nordic companies aim higher when taking action on cost reductions. Four out of ten companies have targets above 20%, which more than double the number from 2016.
- Although, 92% of Nordic respondents are unsuccessful to meet their cost cutting targets, compared to 81% globally.
- Implementation is the greatest barrier.
- Cost management maturity levels are much lower in the Nordics. A high maturity level is typically when cost policies and procedures are continually reviewed and examined to ensure best practices around efficiency and cost management.
- Many companies are adopting a save-to-transform mindset, but the trend lags behind global average. A save-to-transform mindset leverages the power of digital technologies to streamline cost structures and generate strategic cost savings that are both significant and sustainable.
- Automation and other digital technologies take a lead role in cost reduction. RPA and cognitive technologies such as AI have emerged over the past 24 months as the most common digital capabilities developed to reduce costs.
- Technology implementation is a key strategic priority for the next 24
92% of Nordic companies fail in meeting their cost cutting targets, implementation being by far the greatest barrier. The focus today needs to be shifted from tactical to more strategic cost initiatives, exploiting the transformational opportunities provided by digital technologies.
Tuomo Saari, partner and specialist in Cost Management at Deloitte Finland