Leading firms saving up to $1bn from adoption of 'zero-based' strategies
The research, wh...
Leading global companies are achieving savings of up to $1bn from the adoption of ‘zero-based strategies’, according to Accenture.
The research, which surveyed 85 of the biggest organisations around the world, revealed that companies are moving beyond simple zero-based budgeting (ZBB) to a more holistic approach, or ZBx, that allows companies to uncover additional savings to fund growth initiatives.
The ‘Beyond the ZBB Buzz’ study by Accenture Strategy analysed the practices and results of zero-based initiatives implemented by leading global companies across different industries - from consumer goods and banking to retail and life sciences.
The study highlighted the exponential growth in ZBB adoption of 57% per year from 2011 until today, and found that the majority of companies surveyed (91%) have met or exceeded their financial targets.
“ZBB is rapidly helping organisations accelerate growth strategies and pivot to new digital business models,” said Kris Timmermans, Senior Managing Director and Supply Chain & Operations Strategy lead at Accenture Strategy.
“Due to the savings realised, leading global companies are taking ZBB to the next level by applying a zero-based mindset – what we have termed ZBx – across all business functions to gain forensic visibility into spending and funnel savings back into high growth initiatives.”
Companies are adopting ZBB primarily to improve profitability (96%). Yet, nearly half (48%) said they were influenced by competition and 40% cited slow growth as a catalyst.
Surprisingly, the research did not point to the common perception that companies turn to zero-based strategies in crisis mode in an M&A scenario or as the result of pressure coming from private equity funds and activist investors. Only 14% say M&A was a driver and even fewer (8%) cited PE or activist investors as a factor.
Figures also show that leaders are applying a zero-based mindset to other business functions, such as sales and marketing (52%), labour (43%) and logistics (42%). Companies are taking out inefficient money that doesn’t support business strategy and redirecting those resources into growth initiatives, digital investments and other capabilities.
Among the hardest obstacles to adopting a zero-based mindset are cultural buy-in (67%), change management (41%) and data visibility (33%).
However, once the initiatives are in place, there is a common desire among the companies surveyed to ensure they are durable, with 77% investing in control and monitoring to make the results of their zero-based initiatives part of continuous improvement.
“Unlike traditional cost management techniques that use a ‘cut-the-fat and gain-it-back’ approach like every fad diet does, adopting a zero-based mindset requires a full cultural transformation within an organisation.
“It must become ingrained in how people think and work so that it begins to just happen naturally – that’s how you prevent the ‘weight’ from coming back,” said Timmermans.
SAP Ariba to digitise procurement for Expo 2020 suppliers
The global trade event, this year hosted in Dubai, was rescheduled from last year and will now take place between 1 October 2021 and 31 March 2022.
As the event’s Innovative Enterprise Software Partner, SAP Ariba solutions will fully digitise and automate the procure-to-pay lifecycle, providing a streamlined experience for thousands of market leading, global suppliers and strengthening the global supply chain with enhanced transparency and efficiency. The cloud-based platforms operate through on SAP Ariba’s UAE public cloud data centre and connects to the Ariba Network.
Expo 2020 "a long-term investment"
Mohammed AlHashmi, Chief Technology Officer, Expo 2020 Dubai, said the world trade event is “a long-term investment in the future that aims to enhance opportunities for sustainable business connectivity and growth”, which stretches beyond Expo 2020’s six-month window.
“Our partnership with SAP is an example of what can be achieved with the invaluable support of our technology partners to host one of the most digitally advanced World Expos ever,” he added. “The implementation of SAP Ariba solutions has transformed our end-to-end procure-to-pay cycle and helped set new standards of procurement automation for projects of this scale.”
To date, more than AED 1bn has already been transacted by Expo 2020 suppliers through SAP Ariba. The platform promotes collaborative partnerships and allows registered users to participate in sourcing events, negotiate and initiate contracts, and centralise their invoicing and payments in real time.
Claudio Muruzabal, President of EMEA South, SAP, said: “Expo 2020 Dubai is demonstrating global best practices in digitising its procurement process with SAP Ariba solutions to help gain visibility into its spend, tighten collaboration with its suppliers, and achieve process automation, including completely paperless invoicing.”
About Expo 2020 Dubai
Expo 2020 will take place in Dubai and is the first of the long-running World Expos to be hosted in the Middle East, Africa and South Asia territory. The original World Expo, called the Great Exhibiton, was hosted in 1851 at the Crystal Palace in London, designed as a showcase for the innovations of the Industrial Revolution.
Expo 2020 was originally due to run 20 October 2020 to 10 April 2021, but was last year postponed in light of COVID-19 restrictions - though some business has already taken place virtually. The event will place greater emphasis on innovation in sustainable solutions through the Sustainability District, blending technology and culture. It is expected that around 70 per cent of the 25 million attendees will be international visitors.