More about strategic cost management
What separates winners from losers?
Based on return on invested capital (ROIC), companies included in an Accenture study were separated into three categories: winners - those that outperformed their industry for six years after the recession, losers - those that underperformed their industry over the same period, and average performers (figure 3).
Winners' pull away after recession. Performance comparision following the 1990-1991 recession.
Figure 3 summarises the results of research carried out by Accenture, which analysed the financial results of 850 US companies reporting during the recession of 1990-1991. Winners are those that outperformed others in their industry for the six years following the recession of 1990-1991; losers are those that underperformed others in the industry.
The winners took the relatively bold course of focusing on building sustainable future value for the company and its stakeholders. In general, they tended to pursue long-term strategies, not short-term solutions. They looked to strengthen their strategic positions, and implemented strategic cost management frameworks that earned them not only short-term gains, but also had a sustainable positive impact on those areas of their business where their costs were not competitive.
Another piece of research, conducted by SimCorp StrategyLab in 2009, confirms the findings of the Accenture study. To learn more, download a copy of the SimCorp StrategyLab, Global Investment Management Cost Survey report.
What is strategic cost management?
Strategic cost management is the practice of understanding what causes costs to occur, and doing so through cost driver, business process and value chain analyses.
The key to strategic cost management lies in all business processes and activities throughout the value chain. The work of reducing cost that derives from a specific business process or activity seldom leads only to increased cost efficiency. It also feeds through to increased throughput and client value in terms of such things as improved quality and service. In other cases, a strategic cost management approach could lead to a changed operating model, launch of new business areas or new services and products.
SimCorp Dimension enables organisations to strategically manage their cost drivers
The multi-year recessionary climate has shifted investment management software from being regarded as an operational tool, to playing a critical strategic cost management role. SimCorp Dimension enables investment management organisations to take such a more long-term, strategic approach to managing IT costs. The solution achieves sustainable cost savings, enabling investment managers to develop competitive advantages that deliver value-added benefits for their clients, while increasing revenues.
The following links offer detailed insights into how SimCorp Dimension can effectively address these critical cost challenges existing in the front, middle and back office functions as well as in financial instruments and system environments.
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