How to make enterprise cost management sustainable
Riding out the storm
Current conditions may make it difficult for businesses to maintain short-term viability while laying the groundwork for growth.
This report discusses how setting priorities and objectives based on your company’s competitive situation and conducting a structured assessment of your performance improvement needs and capabilities can provide the foundation for sustainable business growth and cost containment.
Corporate earnings and capital spending are rising, yet unemployment remains high and consumer demand weak. Housing markets continue to struggle, and European sovereign debt and euro issues persist.
What does this mélange of factors mean for global markets and marketplaces? Simply put: uncertainty. Not as a short-term condition, but as an ongoing feature of a restructured economic order. Leverage is carrying higher risk premiums, and companies are taking on less of it. Consumers are keeping their belts tighter. Currency, regulatory, and employment issues continue to loom over governments, businesses, and jobseekers.
These conditions may make it difficult for businesses to maintain short-term viability while laying the groundwork for growth. Achieving both those goals could require additional cost management and reduction initiatives, productivity improvements beyond those made in the downturn, and more and better use of technology – which may not be easy.
Nonetheless, most businesses appear to view pursuing growth and tackling cost reduction side by side as inescapable. Ninety percent of business leaders in a 2011 Deloitte survey expect to maintain or grow revenue through 2013, while 80 percent plan to implement cost reduction strategies and programs.
With little low-hanging fruit left for efficiency improvement, executing this combination may require more strategic, aggressive cost management and performance improvement initiatives, with the attendant risk.