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Debunking the Myth
of Cost Cutting

How a fundamental change in thinking is transforming the shape of enterprises.

As new technologies and business models disrupt entire industries on a seemingly daily basis, organizations are looking for more sustainable ways to secure and extend competitive advantages. With the pace of innovation expanding and its impact becoming more pervasive, business agility has become critical. To meet the costs that accompany this speed, companies must now be able to uncover inefficient resources that are not supporting the business strategy and reallocate those funds into growth initiatives that support the future of the business.

Today, no company can afford to simply budget-cut their way to competitiveness, which too often removes the mechanisms of future growth in favor of short-term gains. And with more and more companies facing similar challenges, enterprises across all industries have increasingly turned to a zero-based mindset (ZBx) to help them navigate the pathway to business agility and sustainable growth.

So, how are different industries applying ZBx as part of their business strategy? And what are some of the outcomes and challenges experienced across these different sectors?

Telecom is just one of the many industries benefiting from the adoption of a zero-based mindset. Within this hotbed of innovation, communications service providers (CSPs) are facing increasing pressure from new technologies and digital upstarts. And, as a result, they are looking for ways to free up funds and adapt to market shifts to compete with often smaller, more nimble challengers. To put things in perspective, a recent study by Accenture Strategy found that traditional cost-reduction strategies can only achieve 35 percent of the savings that the top 50 CSPs need to ensure ongoing category leadership.

“Telecom and financial services sectors are not alone—leaders in every industry are using ZBx to become more resilient and innovative.”

By comparison, one of those top CSPs was able to eliminate 20 percent of its entire annual budget by implementing ZBx and recalibrating all network-related operating expenses from the ground up instead —giving the company a significant opportunity to reinvest millions in cost savings into growth initiatives. Another leading CSP applied a zero-based mindset across the organization and ultimately eliminated $550 million in yearly expenses. With customer acquisition/retention efforts and general overhead representing about a fifth of CSP’s standard annual operating expenses, aligning ZBx with supporting technologies such as machine learning and robotic process automation can produce massive savings and improve margins across the board in other areas of business as well.

Sectors such as finance and banking are also primed for revolutionary change. The rise of millennial audiences, growing global wealth shifts, and rapidly changing customer habits are quickly transforming their commercial landscape as well. Digital disruption further threatens to upend traditional business models in these industries, with regulatory demands and compliance needs continuing to skyrocket as well.

Here too a zero-based approach can help address the multifaceted transformations happening to and around the finance and banking industries, using a three-pronged action-oriented strategy:

FIRST, transparency around costs can improve agility. The use of a closed-loop process can help banks gain forensic insight into central functions that generally account for 55 percent to 65 percent of their cost base. This enables financial institutions to better align budgets with potential areas of growth and expose clear areas of opportunity for operative change.

SECOND, ethical accountability driven by a culture of transparency and trust is a must. Bank regulations reflect ethical issues in the banking industry that have eroded the trust of customers and cost banks billions. Sustained growth and value creation requires a cultural shift driven by mechanisms that reinforce responsible conduct and rebuild the trust of consumers.

THIRD, leveraging insights derived from data analytics can build sustainable value across the entire customer lifecycle. New technologies have dramatically expanded channels of communication with consumers, and customer journey analytics have provided a rich source of data. This data can then be used to understand the end-to-end customer experiences that develop novel customer retention practices and find efficient ways to acquire new ones.

Telecom and financial services sectors are not alone—leaders in every industry are using ZBx to become more resilient and innovative. In the oil and gas space, for example, leading providers are turning to ZBx to scale quickly, given the need to weather pricing downturns and exploit periods of sudden growth. In the health-care industry, providers are capitalizing on ZBx to deliver more cost-effective and convenient services to patients. And leading manufacturers, retailers, and distributors are utilizing such solutions to better manage demand and supply chain operations.

Current and future applications of a zero-based mindset are as endless as the growing list of challenges industries and individual businesses face today. The complexity, cost, and scale needed to transform to a future-proof organization is enormous, and ZBx can provide the affordable, turnkey way to drive the ongoing growth needed in every vertical.

With ZBx, enterprises can identify unproductive capital and put it to work where it will have the greatest impact on the business—aligning talent and resources with sectors of business growth and deploying technology that can drive innovation and operational efficiency. By using a consistent framework to adapt to disruption, ZBx enables industries and individual organizations to quickly and efficiently scale to meet these challenges and, in the process, gain a competitive advantage.