Cost Management in the Digital Age
Episode Description
When companies talk about cost management, their focus typically is on slashing their current expenses. But in today’s digital era, cost management has taken on a new hue: It provides a strategic lever to generate savings that can be invested in driving growth.
Christopher Ittner, who chairs the accounting department at Wharton, and recently co-authored a paper titled, “Cost Management in the Digital Era,” with Omar Aguilar of Deloitte Consulting. Ittner says: “Using cost management as a strategic lever, as opposed to a defensive response, opens up new opportunities.”
In a conversation with Knowledge@Wharton, Ittner discusses how companies can leverage digital technologies for cost management in a proactive way. 📂 Finance & Accounting 🏷️ Research
Brief Summary
Chris Etner discusses proactive cost management strategies and the role of digital technologies in enhancing business efficiency and growth.
Key points
- Cost Management as a Competitive Necessity. Companies are shifting from defensive cost management to proactive strategies for growth.
- Transforming Cost Structures with Digital. Digital technologies are enabling companies to rethink their cost structures entirely.
- Low Success Rate in Cost Management. Less than 50% of companies meet their cost management targets, indicating a widespread issue.
- Profit Optimization Over Cost Management. The focus is shifting from merely managing costs to optimizing profits.
- A New Perspective on Cost Management. The approach to cost management is evolving, emphasizing growth and strategic advantages.
- Bridging Business and Data Science. Companies need individuals who can connect business problems with data analytics solutions.
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Episode highlights
- Cost Management as a Competitive NecessityCompanies are shifting from defensive cost management to proactive strategies for growth.“Cost management has become a competitive necessity.”0:27Mar 29, 2019
- Transforming Cost Structures with DigitalDigital technologies are enabling companies to rethink their cost structures entirely.“It's a very different way of thinking about cost management than we've ever done before.”1:17Mar 29, 2019
- Low Success Rate in Cost ManagementLess than 50% of companies meet their cost management targets, indicating a widespread issue.“The percentage of companies that actually hit their cost management targets is far below 50%.”5:10Mar 29, 2019
- Profit Optimization Over Cost ManagementThe focus is shifting from merely managing costs to optimizing profits.“I'm trying to do profit optimization, not just cost management.”7:05Mar 29, 2019
- A New Perspective on Cost ManagementThe approach to cost management is evolving, emphasizing growth and strategic advantages.“It's a completely different way of thinking about this.”17:06Mar 29, 2019
- Bridging Business and Data ScienceCompanies need individuals who can connect business problems with data analytics solutions.“The missing link in a lot of companies is the people who know enough data analytics.”18:29Mar 29, 2019
- The Role of People in Digital TransformationUnderstanding the role of people is crucial as we embrace digital technologies.“We have to figure out what is the role of people here.”20:00Mar 29, 2019
