Indicators that your budgeting process may need a refresh:
- Do you lack visibility into the organization’s cost drivers and transaction level spend data?
- Is your budgeting process based on meeting a high level, top-down target? Is every cost owner challenged to identify savings opportunities?
- Are you able to identify the root causes driving the budget to actual variances?
- Do you have the ability to tie budget line items to specific activities or drivers?
- Do you start with prior year budgets, or do you build zero-based budgets?
- Is your process to create and consolidate organization-wide budgets manual? Do you leverage data automation and visualization tools?
Data Driven Spend Reduction establishes a cost conscious culture, where cost owners have visibility into key cost drivers and accountability over their total spend. PwC’s proven process is data driven and focused on results, changing the way the business operates to achieve significant, sustainable cost savings.
The benefits of DDSR go beyond a one-time spend reduction exercise, enabling your company to sustainably reduce costs and understand true drivers of spend.
- Enable sustainable cost reduction - our DDSR approach enables tactical business changes to deliver immediate and sustainable savings by focusing on the efficiency of key activities and the control of demand
- Accelerate savings - we leverage our standardized digital tools and significant experience to accelerate spend insights and savings realization
- Eliminate low value work - our goal is to challenge every line of spend to eliminate low value work and deliver services at lower cost
- Improve cost accountability - our process enables cost owners to understand and influence cost drivers in order to justify every cost in the go-forward budget
- Start from current or previous year actuals
- Consolidate multiple sources of information using our Spend Insights tool to have a comprehensive view of costs
- Make adjustments to establish a normalized baseline
- Review non-manpower fixed cost in the agreed baseline period for each cost center
- Create Line-by-line visibility into costs, usually not present in current state
- Work with cost owners to understand the spend drivers using our user-friendly drill down visualization capabilities
- Use our industry-specific cost categories and targets to compare against leading practices for more holistic analysis
- Perform forensic spend analysis to challenge all non-essential areas of spend
- Cease spending money on goods and services which add little or no value
- Consider alternative ways of doing things to deliver services at lower cost
- Review all core third party contracts for potential scope and pricing opportunities
- Senior-level leadership sponsorship and buy-in are vital to sustainable savings
- Leadership empowers the cost owners to propose new and creative ideas
- Leadership challenge of costs and savings proposals drives accountability
- Embed awareness of the cost for each and every service and consumable
- Accountability of costs is aligned with control of demand
- Put cost control at the heart of business operations rather than as a finance activity
- Review, change, and enforce authorization levels
Case Study
Identified nearly 23% in annual third party fixed cost savings for a midstream client
An integrated oil and gas client had seen a steady increase in third party spend across its midstream organization. With decreasing oil prices and external market pressure, the organization decided it needed to cut third party spend. Leveraging our proprietary tools and digital accelerators, we analyzed 250,000+ spend transactions across inspection, construction management, major projects, and maintenance and operations activities. We worked side by side with the cost owners from the business to identify savings opportunities, build business cases, and integrate savings into go-forward budgets to drive commitment and instill a cost conscious culture throughout the organization.
“I’m amazed at how quickly PwC came in and provided us insights into our own business and delivered savings which would have been impossible without their process and tools.”
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