Lack of understanding seen as the biggest barrier to cost management
Leading cost management franchise, Auditel, has commissioned an independent survey to examine the strategic importance of cost management amongst organisations across the UK. Over 120 business leaders responded to the survey, which was undertaken by leading business magazine Management Today. Full results of the survey and a feature article have been published on the Management Today website.
Key findings suggests that:
- (70%) of organisations do not have a cost management strategy in place,
- Lack of understanding is the greatest obstacle to cost management,
- The topic of cost management is on the boardroom agenda for 82% of respondents,
- CEO’s are in the main (60%), seen to be champions of cost management exercises, closely followed by Financial Directors (40%),
- In 73% of organisations, cost management measures are undertaken in-house,
- Two thirds of respondents recognise that cost management can accelerate performance, improve efficiency and gain competitive advantage.
Commenting on the research, Chris Allison, Managing Director, Auditel said: “Auditel commissioned the survey as we were keen to see how the importance of cost management was viewed in today’s economic environment. The research shows that businesses and organisations have not embraced strategic cost management as well as they could and indeed should, and a lack of knowledge is commonplace. We see this regularly with organisations. There is a genuine lack of understanding between simple cost cutting exercises and strategic cost management.
“Most organisations don’t have the tools to benchmark costs accurately and then monitor them after implementing cost savings. In fact, less than 2% of the survey respondents claim to track costs or have an ongoing programme. That’s why, as suggested in a recent KPMG survey, 95% of cost reduction exercises carried out fail and costs come flooding back.
“The survey also shows that almost three quarters of the respondents control their cost management in-house, yet experience suggests that they are ill equipped to deal with the task. Over the past 20 years Auditel has worked with more than 5,000 firms and we can say with some certainty that strategic cost management driven by the right people, with the right tools and knowledge can deliver much greater returns than in-house resource alone. With the right tools and knowledge cost management can lead to improved efficiencies, gain competitive advantage and accelerate performance.”
Management Today assembled a group of experts on strategic cost management for an Auditel sponsored round-table event in October. A summary of the discussion and video interviews will be available in December.