Cost transformation for the digital era

Funding growth and reinvention from the inside out

Those in operations and other corporate functions need to reinvent how work gets done. Digital Reinvention® brings in a whole new way of looking at sustained cost reduction in the form of cost transformation. It supports a futuristic, digital operating model by focusing on the internal customer experience, responsive operations and usable insights.

Sustained cost transformation starts by institu-tionalizing everyday tasks into more efficient ones. Making the shift to robotics and automation for example. Or, they can switch to a cognitive analytics insight engine sourced from a constant stream of data, in concert with artificial intelligence (AI), to profoundly redefine and reconceive opera-tional capabilities and functions. And blockchain technologies present opportunities for disruptive innovation by enabling global business transac-tions with less friction and more trust.

It’s a win-win-win: organizations that leverage new technologies and digital capabilities to offer better customer experiences can grow more quickly. The tangible benefit of efficient business processes is sustained lower costs, leaving more cash flow to funnel toward growth, transformation and reinvention. Beyond greater efficiency, freed-up capital can help both to fund and sustain growth, and lead to reinvention through business model innovation.

According to a new IDC spending report, global revenues from cognitive systems and AI will climb from USD 8 billion in 2016 to more than USD 47 billion in 2020. Cognitive initiatives can create better business outcomes, from enhanced customer relationships to greater efficiency and growth (see Figure 1).

There are many drivers for cost transformation through Digital Reinvention.

Examples include:

• Creating differentiating experiences for customers, employees and partners to improve the way organizations work.

• Monetizing new business models and acceler-ating the shift to digital products and design.

• Using customer and product insights for service enhancement and analytics-based segmentation.

• Automating products, services and processes to redefine the customer experience.

• Embedding situational awareness and feedback throughout the value chain for data driven decision making.

• Employing predictive, prescriptive, advanced and cognitive analytics to create deep competitive differentiation.


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Meet the authors

Edward Giesen

Connect with author:

, Global IBM Consulting Partner, European Growth Leader Digital Strategy, Digital Strategy Center of Competence

Utpal Ashar, Associate Partner, Digital Strategy Center of Competence ,IBM Consulting

Anthony Marshall, Senior Research Director, IBM Institute for Business Value

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Originally published 23 February 2017