2025 MarginPLUS study: Resilience and innovation has been saved
Perspectives
2025 MarginPLUS study: Resilience and innovation
7 cost reduction and business transformation trends
In this era of economic uncertainty, companies are shifting their focus from growth to resilience. The 2025 MarginPLUS global cost reduction and business transformation study shows it. Leaders see reducing costs as the key to margin improvement today. They’re doing it by accelerating technology investment, targeting cost-reduction efforts, and being bold enough to learn lessons from not only their successes, but also their failures.
What is driving today’s companies toward cost reduction and business transformation?
According to this year’s MarginPLUS global study on cost reduction and transformation, which included 397 high-level executives from a broad range of industries and geographies, revenue projections remain cautious. Modest growth expectations coupled with the urgent need to build resilience is prompting many companies to increase their focus on hard-dollar cost reduction and reduce their focus on rebalancing spend allocations through spend optimization.
Meanwhile, the business transformation trigger cited most often by the executives we surveyed is competitor action—responding strategically to moves their competitors are making.
Successful companies can drive sustainable results by aiming high, employing strong governance, and investing to help sustain savings. In particular, they are investing in digital technology and improved infrastructure to increase their strategic flexibility and to serve customers more effectively in an increasingly digital marketplace.
7 key findings that explain today’s cost reduction environment
What we’ve been seeing in the market
Based on our organization’s experience working with clients in every industry and geography, we see companies making three common mistakes when pursuing cost reduction and transformation:
- Underinvesting in program infrastructure. Cutting spend on program infrastructure (e.g., transformation management office, compliance and controls, value capture) might seem like a fast and easy way to reduce a program’s overall cost. However, without this solid foundation, programs often suffer from inconsistency, lack of accountability, and excessive risk—all of which can end up costing a company far more than it saved.
- Thinking technology alone will drive savings. Technology implementation can be a big investment. However, technology alone will not deliver maximum efficiency and cost savings. Achieving the expected benefits requires many other elements—including process transformation, change management, and employee training—to change how work actually gets done.
- Losing discipline in the middle. Many cost reduction and transformation programs are multi-year journeys that start with a lot of momentum and quick wins. However, in the middle years, when all quick wins are completed and the challenges grow more complex, many programs lose focus and fizzle out.
Ultimately, success hinges on execution. Companies need to start with a robust program infrastructure, then have the discipline to see programs through to the finish line. They also need to invest in technology—without treating it as a magic cure-all. Unless companies also invest in the necessary related improvements to processes and people, much of the potential cost savings from implementing technology will likely be unrealized or unsustainable.
1Survey responses were collected between October and November 2024. Commentary in this paper is reflective of survey responses, and sentiment may have changed since the survey was conducted.
Get in touch
Abhijit Chakraverty
Managing Director, Strategy / LSHC | Deloitte US
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