Value Based Cost Optimization

Cost management, combined with business growth and innovation are key to success in today’s wealth management industry. During economic downturns, the focus turns toward cost management. Our Value Based Cost Optimization approach provides a novel structured framework for managing your cost structure. It helps relate cost to the value created according to your strategy. This allows reducing costs in those areas that do not add value and supports you to be ready for the future.

Efficiently managing costs is at the core of today’s required management skillset. The most common approaches to cost management have two major flaws:

  • First, costs are often approached from an accounting rather than economic value perspective.
  • Second, costs are related to the value they create through high level target or benchmark cost/income ratios.

As a result most cost cutting measures have only a short term impact but imply significant negative influence on employee morale.

To overcome the drawbacks of common cost management approaches, we have developed a novel framework called Value Based Cost Optimization (VBCO).

  • VBCO is based on your strategy and your value chain
  • VBCO allows understanding and optimizing how your ost structure relates to the value created for your customers and thus also for you.
  • VBCO supports costs optimization rather than pure cost cutting based on three key dimension along your value chain by maximizing the value for all your stakeholders.

Value based cost optimization is not about raw cost cutting or implementing headcount reductions. It is about aligning your cost structure with your strategy.

The Value Based Cost Optimization (VBCO) solution proceeds in five steps as illustrated on the figure below.

  • First, your strategy and associated value chain are reviewed.
  • In step two we collect and analyze data about your current operating environment, decompose its cost structure and value creation.
  • During step three, your target cost and value baselines are developed.
  • In step four, we identify gaps and opportunities and develop target operating model.
  • Step five focuses on prioritizing and implementing the initiatives required to achieve the cost and value baseline targets.

Our Value Based Cost Optimization (VBCO) solution not only provides you with lasting cost savings. It also supports your readiness for the future.

  • VBCO helps you reduce your costs in those areas that do not add value.
  • VBCO supports you to be ready for the future by aligning you cost structure with your strategy and your competitive advantage.