Economic uncertainty often drives quick decisions to cut costs in the short run. But a short-sighted cost-cutting approach could cost more in the long run. Ultimately, spending decisions should meet short- as well as long-term business goals. Balancing cost-cutting and cost optimization thus requires a new strategy.
Enter SCO, an essential approach to managing cost efficiencies while boosting business performance and remaining competitive. The approach should consider all areas of your business operations and should be based on several core principles.
An SCO framework in four dimensions
How do you do it then? Once you have identified cost optimization opportunities, it’s time to figure out the best way to optimize and prioritize them. Cognizant has developed an SCO framework to help define the best strategy for each opportunity, focusing on four dimensions (read more in-depth about them here):
- Right-shoring: delivers high-cost optimization opportunities and rapid speed to benefits. With this approach, you move entire business processes to the most cost-effective delivery locations while taking advantage of experts’ best-in-class process enhancements. It allows you to focus on the unique parts of your business and enjoy cost profiles that match your business objectives.
- Process mining: delivers medium-cost optimization opportunities and medium-to-longer speed to benefits. With this approach, you use tools such as Celonis to model each business process, identify process backlogs, determine levels of rework happening and gain a deeper understanding of how the process performs and where its pitfalls lie. The insights allow you to decide whether a specific process should be e.g. optimized or automated.
- Automation: delivers high-cost optimization opportunities and medium speed to benefits. To realize substantial savings, automation is best applied at an enterprise scale, something that requires an automation-first organization and mentality – and a new skill set. Partnering with a service provider specializing in automation can be both efficient and transformative.
- Enterprise Application Platform rollouts: delivers medium-cost optimization opportunities and low-to-medium speed to benefits. New platform rollouts are necessary for organizations to modernize their operations. However, rollout times can be long and it’s critical to fully assess cost-saving opportunities and prioritize them against time to savings.
As noted above, successful SCO needs to be an enterprise-level pursuit, and businesses need to devise a balanced strategy that optimizes the blend of speed and scale to benefits. To learn more, read about SCO and the framework or visit the Business Process Services and Digital Finance and Accounting Solutions sections of our website.