Revenue pursuit ousts cost-cutting agenda

Signs are emerging that the cost-cutting agenda of recent years has run its course with a renewed focus on revenue growth.

An IBM survey of 456 CEOs including 269 from the Asia-Pacific region (59 from Australia) found cost-cutting has run its course with revenue growth back on the corporate agenda.

Three out of five local CEOs surveyed identified new and differentiated products as the way forward placing plenty of emphasis on technology. Strategy and change Asia Pacific leader of IBM business consulting services, Grace Chopard, said CEOs recognise the need to embed responsiveness and agility into their technology, staff and decision-making process.

But to do this, people skills are critical and Chopard said this was the second-most important issue on the agenda.

Almost 65 per cent of local CEOs said a lack of qualified candidates is a critical problem and will impact on their ability to be agile and enable change.

Naturally, this new competitive landscape creates challenges of its own for IT managers who need to ensure their organizations can respond. Curtin University of Technology IT coordinator Simon Loftus welcomed the shift away from cost-cutting.

"There's only so far an organization can cut costs before vital infrastructure begins to be affected," he said.

"An organization's ability to respond quickly to growth is a challenge especially when it comes to acquiring the right people and skills.

"A lot of it has to do with internal politics. Because our organization is run by academics, not executives, we find that often there is a massive gap between the time when new opportunities arise in IT, and the time when we actually get the chance to look into these opportunities."

Stephen Heffernan, assistant director of IT at the Office of Gambling Regulation, agrees cost-cutting had to slow down before real damage was done.

"It had to stop, otherwise IT departments were just going to find they were burning the candle at both ends," he said.

"We have a program of innovation in place which is woven through the core of our organization, where staff are involved in a lot of strategic planning.

"However, we are a government regulatory body so we are not really looking for that competitive edge."

For Louise Rasmus, YSL Beaute manager of information systems, the survey is not a reflection of what is occurring at her organization.

"We are still experiencing cost-cutting and have seen a 30 percent reduction in operating costs to contribute to an increase in revenue," Rasmus said.

Although the business is considering tools to capture more market information and assist in management of its warehouses, Rasmus still feels it is fairly limited.

"Being a foreign-owned company, we often take directions from overseas in many areas, including IT, so it’s difficult for us in Australia to have any autonomy when it comes to IT decision making."

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