Technology Enablement—Fueled By Data—Is The Ticket To Cost Optimization – Forbes

Is your organization prioritizing technology enablement? Doing so is key to optimizing costs throughout the enterprise given the interrelated nature of cost optimization and technology.
Technology enablement—fueled by data—is the ticket to cost optimization
In recent years, leading CFOs spearheaded efforts in their organizations to move beyond traditional cost-cutting approaches (reactive and more indiscriminate) to focus on cost optimization (targeted spending reductions paired with investments designed to maximize business value). This should be the year that finance leaders inspire their companies to embrace continuous cost optimization underpinned by technology modernization and enablement, and fueled by well-governed data and analytics that harness the full value of AI and other advanced technologies.
Cost optimization is crucial to business performance. Continually reducing spend while making smarter investments to drive profitability growth enables organizations to become more resilient and agile. However, research reveals that cost optimization efforts need substantial improvement in most organizations. A 2024 survey of global finance leaders and professionals found that most cost optimization efforts—from third-party spend risk assessments and robotic process automation (RPA) initiatives to headcount reductions and outsourcing/offshoring strategies—failed to achieve meaningful, measurable progress in the previous 12 months. On the bright side, a majority of CFOs and finance leaders reported in the survey that they made significant progress with cost optimization through technology rationalization and utilization of cloud-based systems and, for those who used it in finance operations, AI.
These positive results point to the path of greatest potential success. How can CFOs and their organizations elevate the performance and outcomes of cost optimization initiatives? The solution is deceptively simple: A majority of cost optimization enablers consist of advanced technologies and tools. Leveraging the full power and value of AI, machine learning, RPA, cloud-based systems and the analytics that support strategic sourcing initiatives requires a receptive technology environment.
The bottom line: More value is generated by these investments when there is minimal technical debt created by outdated legacy systems. This tees up the importance of technology modernization strategies, which reduce technical debt while supporting investments that advance cost optimization efforts.
As organizations strive to achieve higher profitability through topline growth and strategic cost optimization, they must first ensure technology investment and modernization plans are aligned with business strategy and objectives. Such alignment better positions them to identify new opportunities and manage potential risks. The CFO should have a significant voice in this discussion, in collaboration with the CEO, CIO and other C-suite colleagues with skin in the game.
In our view, the most effective technology modernization efforts:
Enterprisewide technology modernization activities also cover finance systems and applications, which is why finance technology roadmaps must be kept current. To that end, CFOs will want to consider prioritizing technology investments (cloud-based financial systems, AI, machine learning and advanced analytics) that not only drive efficiency and innovation but also contribute to subsequent cost optimization progress.
Finally, to no surprise, AI needs to warrant close consideration from CFOs. In the past year, more finance groups have moved beyond using generative AI to improve the efficiency of compliance and risk management activities to deploying generative AI solutions throughout the order-to-cash cycle and in expense management initiatives—and are posting lucrative long-term returns as a result. Those experiences, enjoyed by organizations that have moved beyond talking about AI to deploying it, need to be leveraged by the companies already in the game and recognized as the way forward by those just getting there. As promising as AI tools are today, agentic AI may soon generate even more business value as companies deploy digital labor to scale new operations and businesses quickly and more cost-efficiently.
Fewer growth opportunities are available to organizations taxed by legacy systems, data quality issues, integration difficulties and the technical debt those burdens inflict. That’s why CFOs need to lead the way in their organizations to drive technology modernization, technology enablement and cost optimization initiatives, with the mindset of sustaining a continuous journey emphasizing high certainty of realizing tangible value. Accordingly, proposed investments in selected use cases should be supported by a compelling business case articulating the value and ROI that will be delivered.

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