Companies focus on costs to survive economic turmoil

Management is now talking about “cost optimisation” in order to survive through the current global economic turmoil according to Hilda Mulock Houwer, head of markets for KPMG in Cape Town. Research conducted by the company in the Western Cape found that companies in the province were following a number of different approaches towards managing costs. “Analysis of the various initiatives shows that most initiatives focus primarily on short-term objectives. As pressure increases from executive management, line managers tend to concentrate on cost savings that are readily achievable in the short term without taking the long term agenda and impact into account. “These short term initiatives include the realisation of cost savings in the procurement space (85%), process optimisation (80%), supply chain optimisation (55%) and cash management (55%)”. The investment in longterm strategic objectives such as shared services and new technologies is not considered widely as a possible cost reduction initiative, she says. It is not all about cutting costs – companies are still planning for growth. “The survey does not indicate that organisations are moving into blind panic as the revenue side of the business continues to receive attention. All participants have explored, or are exploring, options to increase revenue in 2009; this can be seen as a part of a balanced organisational strategy.”