Operational Costs

Reduce operational costs through optimized service delivery

Minimizing operational costs is a constant priority for businesses, and the volatility of the pandemic economy has caused many companies to double their cost reduction efforts. Many companies have sought to cut operational costs by reducing head count and freezing discretionary spending. However, market pressures make this approach hard to sustain, and many of these reductions will inevitably be reversed as businesses ramp back up after the pandemic.

As a leading enterprise benchmarking firm, The Hackett Group^® provides global strategy and operations consulting that can help companies to achieve sustainable cost reduction through strategically designed service delivery models.

The need for sustainable cost reduction

As companies seek to resume growth in a post-pandemic economy, the most competitive businesses will be those that have instituted sustainable cost reduction measures, rather than those that pursued cost reduction wherever and as quickly as they could.

As business ramps back up, many companies face the prospect of reversing most or all of their recession-driven cost optimization actions for three key reasons.

• Across-the-board cuts. Many companies have sought to reduce SG&A expenses with across-the-board staff reductions and discretionary spending freezes. While these can be sustained for a short period of time, in the long run companies must often expand staff, increase compensation and restore budgets in response to market pressures.
• Challenges in scaling up. Many businesses rely on nonstandardized internal processes that don’t scale well and can’t be outsourced affordably. These nonstandardized processes tend to require specific knowledge and skills, and can become quite costly as the business ramps up in staffing.
• Lack of automation. Many companies have not fully leveraged process automation opportunities. Companies stuck with manually intensive processes are unable to scale up output without scaling up staff.

Research by The Hackett Group suggests that the strongest driver of sustainable cost reduction is an optimized service delivery model. By purposefully and intelligently defining how certain work gets done, where, and by whom, companies can more easily achieve sustainable, scalable reduction in operational costs.

Managing operational costs with The Hackett Group

The Hackett Group is an intellectual property-based strategic consultancy providing a broad array of services to global companies. Our business benchmarking services, advisory programs and transformation consulting solutions help companies develop and execute an optimized service delivery strategy. Through more than 26,000 benchmarking engagements with leading companies worldwide, we have developed extensive hands-on experience and an acclaimed repository of benchmark data, process metrics and best practices that deliver insight into how world-class companies structure their service delivery functions.

Rather than relying strictly on across-the-board staff reductions and discretionary spending freezes to reduce operational costs, top-performing businesses rely on global service delivery strategies that leverage business process improvement programs, shared services centers and business process outsourcing opportunities. This approach enables structural cost optimization that delivers competitive advantage regardless of whether the economy is on the rise or decline.

Our process for helping companies minimize operational costs includes:

• Analysis. We perform comprehensive cost and cash flow analysis.
• Comparison. We deliver business benchmarking that reveals how top-performing companies structure and deliver key functions.
• Strategy. We build service delivery strategies that reflect the realities of each customer’s business.
• Planning. We develop road maps for reducing and optimizing costs.

Our approach

We can help establish sound, sustainable cost reduction strategies through:

Business process improvement programs

Our solutions include benchmarking services, advisory programs, consulting services, and IT solutions to enable and sustain business process improvements. Additionally, we provide clients with access to our Best Practices Intelligence Center™.

Smart automation solutions

Our experts help companies implement robotic process automation, cognitive computing and other emerging business automation solutions.

Shared services and global business services organizations

Our consulting services cover the entire spectrum of GBS processes and operations. From defining the right service delivery model to addressing any strategic or operational aspects that impact business performance, we provide the right combination of capabilities, resources, and approach to help deliver maximum value from GBS.

Outsourcing consulting

As an outsourcing consulting partner, we help design outsourcing strategy, select outsourcing providers, benchmark contracts and pricing, plan for smooth transitions, optimize post-implementation arrangements, and return outsourced activities to internal functions.

Why choose The Hackett Group?

The Hackett Group is a leading global strategy and operations consulting firm with expertise in performance benchmarking and business process change. We offer digital transformation services that include implementation of leading enterprise cloud services and applications, finance transformation, workflow automation, zero-based budgeting, integrated business planning, and advanced analytics that enable Digital World Class^® performance.

Our services and best practices are based on unparalleled IP and more than 26,000 benchmarking studies with the world’s leading businesses. These include 97% of the Dow Jones Industrials, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the FTSE 100.

Founded in 1997, The Hackett Group is publicly traded on the NASDAQ as HCKT and has global offices in the United States, Europe, and Asia-Pacific.

FAQs

What are operational costs?

Operational costs are business expenses that include direct costs of goods sold (COGS) and selling, general and administrative (SG&A) expenses such as payroll, facilities, and other overhead costs. A company’s net income is calculated by subtracting operational costs from gross revenue.

What’s the best way to reduce operational costs?

While many companies reduce operational costs through across-the-board cuts in staff and expenses, a more effective form of cost reduction is to optimize service delivery strategies. This can be accomplished through business process improvement, shared services and business process outsourcing opportunities.

What is The Hackett Group?

The Hackett Group® (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking firm, offering digital transformation services to global companies. Our offerings include a wide range of solutions – from financial planning and analysis and order-to-cash solutions, to smart automation, application managed services, working capital management and outsourcing consulting.