Before Making Cuts
Rikkii Richman MBA – 11/12/2020
Many businesses have taken a revenue hit this year, so revisiting current costs is inevitable as organisations prepare their plans for 2021. With cuts likely to be required in order to bridge gaps between forecasts & actuals, it’s reasonable to assume that decision-makers will gravitate to the high-cost elements of the budget sheet, with a view to making the numbers much smaller, or losing them altogether. But before making cuts, it is important that those elements making up the costs are fully understood, just as the potential impact of making those cuts should be equally understood.
Operating costs are likely targets, so attention may be on staff & vendors. But there’s more at play than just surviving today. If Covid-19 has taught us anything, it’s the need to continually evolve, so organisations should also consider transformation & growth initiatives & investments to protect from future business-impacting curveballs. For organisations already running with lean teams, the options may be limited, particularly if loss-making or low revenue services continue to be provided
Cost cutting, therefore, needs considering with input from IT, Finance, Product teams & other key business functions to help avoid throwing the baby out with the bath water. IT has been in the spotlight this year and organisations know they need to invest in technology to ensure business continuity and long-term survival. Some organisations will have been held back by legacy systems that may not have fully integrated with some of the newer technology that was implemented to provide continuity through the pandemic. Transforming the organisation to become more digitally proficient requires people; staff that understand the current operating model and the issues therein, those that need to keep the current operation running, and skilled resource to execute the transition to the future state. So, when making cuts, make sure there are adequate provisions to embark on, or continue the critical transformation initiatives that are essential to reimagine the business and IT operating models.
Irrespective of where you or your organisation is with its business or digital transformation initiatives, we can support your transformation activities by conducting a discovery exercise, create proposals recommending actions, lead or help lead you through various stages of the initiative. Please contact us for more information or to arrange an initial conversation to discuss how we can help.
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