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Industry Research : CFOs Putting Off Strategic Cost Management Despite Nearly One-Quarter Fearing Their Company Will Cease to Exist
Nearly one-quarter (24 percent) of Chief Financial Officers (CFOs) fear that their companies will cease to exist as they do today due to disruptive competition. Yet, in response, while companies intend to focus on growth, only six percent of CFOs plan to make strategic cost management a priority this year, according to a new study by Accenture.
The Accenture Strategy report, CFO Reality Check: Good Intentions in Cost Management are Not Good Enough, reveals that beyond fears for the future of their own company, 58 percent of CFOs think their industries will be disrupted, and 41 percent think that more than half of their competitors will disappear. The majority (59 percent) of CFOs think strategic cost management must be part of their response at some stage, but the low priority they place on it this year suggests they are putting off taking action.
The report argues that if companies want to survive the impacts of competitive disruption, they must shift from ad hoc cost cutting to strategic cost management that uses digital technologies to sustain their efforts. For CFOs who are currently pursuing this approach, over half of their companies are mostly investing in mobility and moving activities to the cloud (54 percent and 52 percent respectively).
Three years from now, they will also make further investments in robotics and big data analytics (44 percent and 40 percent respectively). The research shows that CFOs in some industries are particularly concerned about the risk of digital irrelevance.
The CFOs in the following industries most strongly believe their businesses may not survive against competition:
• Insurance (40 percent)
• Energy (31 percent)
• Consumer Goods (23 percent)
• Automotive and Industrial (23 percent)
While there is recognition for a need to change, few are committed to changing their company’s business strategy. CFOs in insurance (three percent), Energy (16 percent), Consumer Goods (10 percent), Automotive and Industrial (seven percent) all ranked changing business strategy as a low priority.
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Accenture is a global management consulting, technology services and outsourcing company. Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills, and technologies to help clients improve their performance.
Published: Wednesday, March 23, 2016