ISG Survey: Enterprises Aiming for 7% Cost Savings in 2023
April 25 2023 - 9:07AM
Business Wire
Companies challenged to achieve higher
savings this year, after rapid cost takeout in 2022
Decentralized decision-making and
inconsistent measurement contribute to missed targets
Enterprises worldwide are aiming to cut costs an average of 7
percent in 2023, after realizing similar cost savings last year
from rapid cost takeout measures, according to a new survey by
Information Services Group (ISG) (Nasdaq: III), a leading global
technology research and advisory firm.
The latest global ISG Buyer Behavior Study, conducted in
February 2023, asked more than 250 executives about their cost
optimization plans and cost-savings targets, among other
impacts.
“Companies are raising the bar on cost savings this year, but
they will be challenged to do better than last year, when they were
able to pick much of the low-hanging fruit,” said Alex Bakker,
director of primary research for ISG and co-author of the cost
optimization study. “Generating consistent, year-on-year savings
requires a much more detailed and thorough evaluation of
costs.”
According to the ISG survey, 69 percent of enterprises met or
exceeded their 2022 cost-savings targets. Of the 31 percent that
missed their 2022 targets, the vast majority (20 percent) narrowly
missed them.
“Managing costs at the speed of digital requires a shift in
enterprise thinking and sustained, high-level focus,” said David
Lewis, partner and leader of the ISG Cost Optimization advisory
practice. “Our survey results revealed a strategic gap between 2022
cost targets and actual results, which may stem from inadequate
prioritization, a lack of senior-level focus and inconsistent
measurement on the part of enterprises.”
Lewis noted the magnitude of targeted savings was less a factor
in whether or not a company achieved its objectives in 2022 than
the approach it took to achieving those targets. The ISG survey
found the majority of reported cost metrics are not actively or
formally managed, and enterprises are challenged by manual cost
reporting or consolidating results from a range of tools and
sources, and by the delegation of cost leadership around the
business.
Nearly all enterprises surveyed had a dedicated cost
optimization program, yet around a third said their program did not
have a dedicated lead, but instead had distributed responsibility
across roles and lines of business for measuring progress against
targets, often resulting in a siloed approach to achieving
results.
“For cost optimization to succeed, organizations need to
understand their business requirements, establish cost allocations
and chargeback-enabling tagging strategies, develop KPIs and
benchmark internal teams and external industry peers,” Lewis said.
“Further, they need to combine strategy, governance and best
practices to drive the financial accountability required to achieve
their targets this year, because all the easy wins have already
been taken.”
Both customer experience and information security were cited by
respondents as extremely important to their organization’s
strategic direction, with more than half saying initiatives in
those areas would be completely protected from cost
optimization.
The primary motivations for cutting costs, the survey found,
were long-term efficiency and business transformation and growth,
cited by 70 percent of respondents. Less than a quarter of
respondents cited economic conditions as the motivating factor,
even for programs launched in the past year.
“Cost optimization in this environment is about transitioning
from long-term fixed commitments to long-term strategic
relationships,” Lewis said. “Enterprises should look to achieve
cost savings not only for bottom-line impacts, but to free up
resources to fund continuous digital transformation programs that
improve customer and employee experience, meet increasing ESG
requirements and fuel sustainable growth.”
The ISG Cost Optimization advisory practice helps clients
identify, achieve and sustain cost savings; improve productivity;
re-invest savings in new digitally enabled business models and
digital transformation initiatives; enable competitive resilience
and reduce technical debt. Click here for more information and the
full results of the 2023 ISG Cost Optimization Survey.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading
global technology research and advisory firm. A trusted business
partner to more than 900 clients, including more than 75 of the
world’s top 100 enterprises, ISG is committed to helping
corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster
growth. The firm specializes in digital transformation services,
including automation, cloud and data analytics; sourcing advisory;
managed governance and risk services; network carrier services;
strategy and operations design; change management; market
intelligence and technology research and analysis. Founded in 2006,
and based in Stamford, Conn., ISG employs more than 1,600
digital-ready professionals operating in more than 20 countries—a
global team known for its innovative thinking, market influence,
deep industry and technology expertise, and world-class research
and analytical capabilities based on the industry’s most
comprehensive marketplace data. For more information, visit
www.isg-one.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230425005723/en/
Press:
Will Thoretz, ISG +1 203 517 3119 will.thoretz@isg-one.com
Julianna Sheridan, Matter Communications for ISG +1 978-518-4520
isg@matternow.com
Information Services (NASDAQ:III)
Historical Stock Chart
From Mar 2024 to Apr 2024
Information Services (NASDAQ:III)
Historical Stock Chart
From Apr 2023 to Apr 2024