Growth trumps cost cutting, says survey

Will Green is news editor of Supply Management
31 January 2018

Growth is more important than cost reduction in triggering major operational transformation, according to a survey.

A top-down directive to drive growth was cited by a quarter (24%) of senior managers as most likely to spur a transformation, compared to a fifth (20%) who said a directive to cut costs.

The study, by HfS and Accenture and called The Future Belongs to Intelligent Operations, found respondents anticipated average cost reductions of around 22% in three years from transformation initiatives but wanted revenue growth of almost 21% in the same period.

“Growth trumps cost savings in driving transformation,” said the report.

“Cost reduction alone no longer ensures success; driving top-line growth has become equally if not more important.”

The survey involved 460 responses from CEOs, senior VPs, VPs and directors across a range of industries from Europe, including the UK, North America and Asia Pacific.

The report said digital disruption, “data explosion” and customer experience were the driving forces behind the need for transformation, and almost 80% of respondents were concerned about disruption and competitive threats, particularly from new digital-savvy entrants.

“What companies have traditionally relied on to improve performance – process optimisation, cost reduction, and predictability – simply can’t deliver what’s needed to maintain share and grow the next generation of customers,” said the report.

“To survive and thrive today and tomorrow, enterprises must be able to act quickly – with intelligence, insight, and confidence – to changes in the competitive and customer landscape.

“Agility, flexibility, and responsiveness are now the keys to enhancing and optimising the customer experience and delivering superior business outcomes.”

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