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Use your data to manage enterprise costs in a crisis

FeedStock FeedStock
12 May 2020
Quick Read

This quick-read looks at how enterprises can use data to manage costs, while maximising the operational, cultural and revenue-generating opportunities that arise from a major disruption to market environments. It draws on case studies of the enterprises which emerged from the 2008–09 recession most successfully to identify the key traits of a resilient enterprise and builds a three point plan for enterprise success as we enter into this period of economic downturn.

  • Define the full arsenal of cost reduction measures
  • Invest in business productivity and the “new normal”
  • Accelerate the adoption of digital solutions

“During the current crisis, businesses have worked faster and better than they dreamed possible just a few months ago. Maintaining that sense of possibility will be an enduring source of competitive advantage.*”

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What makes an enterprise resilient in a crisis?

An enterprise’s resilience in a crisis relies primarily on its ability to quickly and effectively reduce costs without impeding the organisation’s long-term performance. This involves making decisions which will decrease costs, whilst also increasing productivity and enabling the enterprise to capitalise on opportunities that may emerge from a dramatic shift in economic backdrop.

Analysis done of 1,100 publicly listed companies between 2007 and 2011 defined the top quintile of performers as “resilients”. The research found that the best performing companies increased financial flexibility by deleveraging their balance sheets prior to the economic trough. Resilients also decreased operating costs more effectively and consistently than their peers both ahead and during the downturn. Translating these lessons into today’s external environment would suggest that resilients will be characterised by their ability to cut costs more effectively than their peers. However, since 2009, the financial services industry has seen increasing competition in global markets, growing compliance obligations and relentless downward pressure on margins, resulting in a situation where further cost-cutting seems nearly impossible. Given the current environment, enterprises need to reform and reimagine how they can effectively manage costs: they need to use the tools they have available to them today, which weren’t readily available in 2009.

Adjusting to today’s crisis environment

The International Data Corporation predicts that the collective sum of the whole word’s data will grow from 33 zettabytes in 2018 to 175 zettabytes by 2025. The exponential growth of data poses both a challenge and an opportunity for enterprises looking to get ahead in the recessive economic environment which will undoubtedly follow the COVD-19 pandemic.

FeedStock has been working with clients across the financial services industry to enable them to discover hidden cost-management opportunities from within their structured and unstructured enterprise data. Our automated data-capture systems have enabled our asset management clients to reduce their investment research spend by up to 50%.

By delivering a 360-degree view of enterprise activities, AI-driven data-capture has enabled our clients to identify productivity improvements, reduce the cost and risk of compliance requirements and use data and analytics to drive improved enterprise decisions.

Based on discussions we have had with C-Suite executives from across the financial services industry and extensive research into enterprise resilience strategies, FeedStock has identified three key strategic phases which will contribute to enterprise resilience and enable your organisation to move from surviving to thriving in today’s crisis environment.

Phase 1: Define the full arsenal of cost reduction measures

A few of the general operational costs such as travel and accommodation have been taken out of our control. However, their departure marks the emergence of new operational and compliance costs and challenges posed by remote working. One example of this is that disparate work forces increase the risk, cost and burden of research compliance. Deploying AI-driven, automatic research inducement monitoring technology has enabled our clients to reduce their risk of inducement by over 90%. Smart use of data and analytics has helped them to identify which research providers are generating value and fully understand their research relationships despite the growing challenges presented by remote employees, clients and providers.

Phase 2: Invest in business productivity and the “new normal”

We previously alluded to the value of data in guiding smarter enterprise decisions. Resilients will use AI data-capture technology to effectively manage costs; and crucially, the investment in that technology will lay the foundations for them to thrive in the “next normal”. The Coronavirus pandemic has resulted in a dramatic acceleration of digitisation on a global scale. As our use of digital channels increases, so too does our reliance on effective management and analysis of data. Deploying automated data-capture technology has enabled our clients to save up to 30% of front-office time by removing the need for manual data inputs. Embracing the trend of accelerated digitisation which has been experienced across every sector following the outbreak of the pandemic has enabled our clients to streamline workflows and boost the productivity of key revenue-generators.

Phase 3: Accelerate the adoption of digital solutions

McKinsey uses a case study of Brazil’s 1970 World Cup Football victory to illustrate how enterprises which can “reimagine their business model as they return to full speed” will come out on top in the post-COVID environment. In today’s increasingly digital and disparate working environment, “reimagining” a business model requires the adoption and deployment of digital solutions.

The final element of FeedStock’s three point plan to deliver enterprise success in today’s recessive economic backdrop is the acceleration of digital adoption strategies. FeedStock is founded on the belief that superior data results in a superior business, and this has never been more true. Our recent discussions with C-Suite executives from across the financial services industry have centred around the four following outcomes:

  1. Refocus digital activities on delivering improved customer experience and refining the sales process
  2. Incorporate new data and train new models to enable real-time decision making
  3. Accelerate IT modernisation such as cloud adoption
  4. Harness the agile mindset to deliver tech solutions to customers and colleagues at scale, quickly

Move from Surviving to Thriving

These four points summarise the strategy and outcomes of the acceleration of digital adoption which we are helping our clients to implement. As we move into the post-COVID 19 era, enterprises which are rapidly accelerating their adoption of AI technologies will be in a position to move from surviving to thriving in tomorrow’s economic environment.

 

References:

McKinsey, From surviving to thriving: reimagining the post COVID-19 return, May 2020

 

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