“Explore how digital technology is reshaping cost management strategies in response to economic uncertainties. Learn about the transformative impact of digital tools, cognitive technologies, and strategic approaches for effective cost management in today’s dynamic business environment.”
The profession of cost management and cost professional needs sea change to keep the current state of the global economy. Running a business in uncertain economic times has now become routine. Covid, the Ukraine-Russia war, fluctuating inflations, political uncertainty, rising interest rates and liquidity crunch from the backend have led every organisation to adopt one single word Cost Management (Cost Cutting).
MSMEs are the biggest suffers of these uncertainties and hence every organisation needs to move ahead from traditional cost management (cost cutting) to effective management of the business. Effective talent implementation is also a part of cost management through digital cognitive technologies and predictive analytics which is transforming cost management digitally.
The profession demands significant analysis and reinvestment of its tools and strategies for the success of effective cost management. Digital tools enable us to think about cost management in a different way moving ahead from the traditional cost-cutting process. Digital tools create a “black box” of data to be used effectively for cost management. Talent and processes both need to be reinvented for digital cost management.
Technology alone, however, is not enough, they say; effective digital cost management also requires a far more innovative and strategic approach than traditional approaches to cost management. Digital tools such as cloud, automation, cognitive technologies, and predictive analytics, enable financial, operations, and commercial information to be converged in a way that has been difficult to achieve before. MSMEs have these tools but what they lack is effective execution which leads to cost-cutting activities during uncertain times.
Digital technology is not only focused towards the reduction of cost but it enhances the optimum utilisation of resources to derive a more strategic value proposition from assets. Cost management is a word which is only derived when cutting down the cost is to be placed to re-align the company from the wrong decision taken over time. Cost cutting word in recent times has been linked with layoffs. Cost management and cost-cutting mean the company is in bad shape. Well, these are the most common notions meaning which common people make out. But if we dig into cost management during the current digital era we find that the subject is getting changed dramatically.
It has been found that those companies who try to follow Cost management don’t achieve the cost targets. A strong strategic imperative is essential for making cost management to be effective. So cost management in response to growth imperatives is also the only one that leads to growth in revenues for the companies.
Earlier companies used to have huge IT departments to manage the back-end IT structure. The same has been replaced with high-end software services and platforms like SAAS. This is beyond outsourcing which is cost management through digital effectiveness. This leads to complete optimization of the cost of business resulting to increase revenues.
Using new technology leads to significant cost management replacing the traditional mode of operation is thinking out of the box based on the current scenario. On the other hand company like Amazon has their IT infrastructure since outsourcing will be a very high-cost affair rather than having in-house.
But it has been found that very few companies have what I’ll call the digital maturity to immediately scale a digital cost management program across the company, for most organizations, it’s a journey. Yes, digital maturity is highly required in this new age of cost management through digitally. If you start working and scale to the top gear within a very short period of time based on current cognitive analytics then that might turn out to be a disaster. Well, the current state of affairs of many companies speaks loudly on this part.
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