Wright spoke to CFO Innovation’s Cesar Bacani about the results of Accenture’s latest profit and cash optimisation pulse survey, how Asia’s companies are responding to the age of volatility in the post-crisis environment, business process outsourcing and other issues.  

We really focus on cost management as opposed to cost-cutting. There are subtle differences between the two. What we’re seeing and what I think is a real positive legacy of the downturn is that organisations are now forced to focus or have become accustomed to focusing on cost management as a way of doing business.

 

When we surveyed a number of organisations [for Accenture’s 2010 profit and cash optimisation pulse survey] about what they think about cost management going forward, they’re still going to be focused on it aggressively. It can have a cost reduction angle to it, but it’s also about reallocating cash to more strategic initiatives, particularly in the Asia Pacific, where there’s still a significant growth agenda. We’re seeing organisations try to divert cash to customer service, to marketing, to the growth countries and geographies.

 

I think that’s exactly right. Organisations were forced into [cost-cutting] out of necessity, to drop some things to prop up the P&L and support the company through that very difficult period. Some of the disciplines that were put into place are maturing. Organisations, I think, are now going to benefit from that increased focus on asking some really key questions. Where am I spending my money? Who am I spending it with and how can I spend more strategically? Really thinking through some of the questions that will allow you to manage that cost much tighter.

 

I don’t know of organisations that have specifically said that. I think what they are looking at is to continue slashing the budget in line with business needs. Clearly there were some low-hanging fruits in terms of reallocating costs around the downturn. We saw the advertising and marketing spend being reduced. We saw [cuts] around employee benefits. Just removing redundant roles and activities within the business that were not delivering immediate benefits and immediate value. Now, some of that spend will clearly come back as businesses focus more on growth. But I think that they were the right and necessary moves [during the global recession].

 

It’s one thing to get some rapid benefit; it’s another thing to get sustained benefits. What we saw last year were rapid benefits, which were necessary to react to the unprecedented volatility in the marketplace. But now, organisations are focusing much more on sustained benefits.

 

That involves much closer working relationships with the supply base, it involves using technology to drive higher levels of collaboration, it involves organisational change within the business, really thinking through how to drive more central and standardised processes. It can also involve business processes outsourcing. By outsourcing more of their transactional low-value activities, organisations can focus much more on their strategic high-value activities. .