Technology · 2020. 8. 31. · Save-to-transform as a catalyst for embracing digital disruption |...
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Save-to-transform as a catalyst for embracing digital disruption Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Global Cost Report 2019-2020 Technology
Transcript of Technology · 2020. 8. 31. · Save-to-transform as a catalyst for embracing digital disruption |...
Save-to-transform as a catalyst for embracing digital disruption Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Global Cost Report 2019-2020 Technology
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
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ContentsContents
Executive summary 4
About the study 10
How is the technology sector different? 12
Firmographics 16
Technology sector results: Key insights 20
Digital and technology solutions applied to cost management in the technology sector 36
Save-to-transform as a catalyst for embracing digital disruption 42
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Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Equam ipsamen 01
Impos is enditio rendae acea 02
Debisinulpa sequidempos 03
Imo verunt illia 04
Asus eserciamus 05
Desequidellor ad et 06
Ivolupta dolor sundus et rem 07
Limporpos eum sequas as 08
Ocomniendae dit ulparcia dolori 09
Aquia voluptas seque 10
Dolorit ellaborem rest mi 11
Foccaes in nulpa arumquis 12
ContentsContents
Executive summary 4
About the study 10
How is the technology sector different? 12
Firmographics 16
Technology sector results: Key insights 20
Digital and technology solutions applied to cost management in the technology sector 36
Save-to-transform as a catalyst for embracing digital disruption 42
2
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Digital technology and digital disruption have burst onto the scene as key levers for cost management and business transformation around the world and throughout the technology industry. In Deloitte’s 2017 Biennial Global Cost Survey, digital disruption was identified as an emerging risk by respondents in the United States but was barely visible elsewhere. Now, however, digital risks—including digital disruption and cybersecurity—rank among the top external risks for technology companies in all regions.
Foreword
1. Thriving in uncertainty in the age of digital disruption: Deloitte’s first biennial global cost survey report, December 2017.
2. Ian Barker, “Half of Companies Won’t Move Mission Critical Workloads to the Cloud”, BetaNews, August 2019;
3. Anthony Spadafora, “Companies Don’t Think Their Cloud Can Keep Up with Security”, Tech Radar, August 7, 2019
4. State of AI in the Enterprise, 2nd Edition, Deloitte, October 22, 2018
5. Deloitte State of AI in the Enterprise Survey, 2019
6. Joe McKendrick, “Hybrid Cloud Serves as Bridge to Our Bright All-Cloud Future”, ZDNet, August 12, 2019; Tarun Dua, “Hybrid Clouds Play Key Role in Strategies Across Organizations”, Financial Express, April 11, 2019
7. Macy Bayern, “Rise of Multicloud: 58% of Businesses Using Combination of AWS, Azure or Google Cloud”, TechRepublic, January 24, 2019
8. Ann Taylor, “Edge Computing is in Most Industries”, Network World, April 23, 2019
9. Technology, Media and Telecommunications Predictions 2020, Deloitte, December 2019
Sam Balaji Global Consulting Leader
Omar Aguilar Strategic Cost Transformation Global Market Offering Leader
Tech companies today face a wide range of unique challenges, including:
• Cloud adoption continues to grow, but apprehensions linger. A recent FileCloud report2 states that 50% of companies do not plan to move mission-critical workloads to the public cloud, while Symantec reports that more than half of organizations face challenges protecting their workloads3.
• Importance of AI is increasingly recognized. Globally, there is a growing realization of AI’s importance, including its potential to provide competitive advantage and change work for the better. According to Deloitte’s 2019 State of AI in the Enterprise Survey4, 38% of US-based IT and line-of-business executives believe AI will be of critical strategic importance within two years, compared to only 10% in 20195.
• Hybrid and multicloud environments are becoming the norm. Companies will likely embrace flexible consumption through hybrid and multicloud environments. Gartner predicts6 that by 2020, 90% of organizations will adopt hybrid infrastructure management. Also, according to a 2019 Kentik report7, 58% of businesses are already using a combination of AWS, Microsoft Azure and Google Cloud in their multicloud networks.
• Edge computing is on the rise. IoT devices, combined with the portability of computing power and AI-driven tools, will likely drive growth of edge computing. According to Gartner8, companies generated only 10% of their data outside a data center or cloud in 2019, but that number will likely grow to 75% over the next six years. IDC predicts that in three years, 45% of IoT-generated data will likely be stored, processed, analyzed and acted upon close to or at the edge of networks.
• The edge AI chip industry is poised for growth. Deloitte’s Technology, Media and Telecommunications Predictions 2020 report9 predicts that more than 750 million edge AI chips will be sold in 2020, and that the market for such chips will likely grow twice as fast as the overall chip market—with smartphones driving the majority of the growth.
• Partnering strategies are shifting. Today’s ultra-competitive, highly complex technology environment demands a shift in partnering strategies. Multiplayer alliances will likely be needed to create end-to-end solutions from best-of-breed assets. Lines will blur as everything-as-a-service (XaaS) expands into security-as-a-service, data-as-a-service and device-as-a-service. Indirect channel partners will remain crucial but must transform to deliver new forms of value.
In this challenging environment, cost management remains a strong imperative for technology companies; however, the prevailing mindset across the sector seems to be expanding from save-to-grow to save-to -transform. Most tech companies continue to have very positive expectations for revenue growth, and many are using cost reduction as a tool to help fund their required growth investments. However, in today’s increasingly digital world, more and more tech companies also recognize the need to transform their operations and capabilities with infrastructure investments in key digital innovations such as robotic process automation, cognitive technologies, business intelligence and cloud-based ERP systems.
These digital technologies and innovations can deliver dramatic improvements in competitiveness, performance, operating efficiency and, increasingly, cost savings. Just as important, they can strengthen a company’s positioning against adverse future events, including economic downturns and digital disruption.
With digital innovation emerging as a critical enabler for both cost reduction and business transformation, we are delighted to present the results from our latest global cost survey. The study includes responses from 169 executives and senior leaders representing major technology companies from around the world.
This report provides an up-to-date view of the cost management practices and trends shaping the future of the tech industry and global business. It also takes a detailed look at how the latest digital technologies and cost management strategies are acting as a catalyst for transformation in a world being actively redefined by digital disruption.
We hope you find these insights useful and look forward to hearing your thoughts and feedback.
4 5
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Digital technology and digital disruption have burst onto the scene as key levers for cost management and business transformation around the world and throughout the technology industry. In Deloitte’s 2017 Biennial Global Cost Survey, digital disruption was identified as an emerging risk by respondents in the United States but was barely visible elsewhere. Now, however, digital risks—including digital disruption and cybersecurity—rank among the top external risks for technology companies in all regions.
Foreword
1. Thriving in uncertainty in the age of digital disruption: Deloitte’s first biennial global cost survey report, December 2017.
2. Ian Barker, “Half of Companies Won’t Move Mission Critical Workloads to the Cloud”, BetaNews, August 2019;
3. Anthony Spadafora, “Companies Don’t Think Their Cloud Can Keep Up with Security”, Tech Radar, August 7, 2019
4. State of AI in the Enterprise, 2nd Edition, Deloitte, October 22, 2018
5. Deloitte State of AI in the Enterprise Survey, 2019
6. Joe McKendrick, “Hybrid Cloud Serves as Bridge to Our Bright All-Cloud Future”, ZDNet, August 12, 2019; Tarun Dua, “Hybrid Clouds Play Key Role in Strategies Across Organizations”, Financial Express, April 11, 2019
7. Macy Bayern, “Rise of Multicloud: 58% of Businesses Using Combination of AWS, Azure or Google Cloud”, TechRepublic, January 24, 2019
8. Ann Taylor, “Edge Computing is in Most Industries”, Network World, April 23, 2019
9. Technology, Media and Telecommunications Predictions 2020, Deloitte, December 2019
Sam Balaji Global Consulting Leader
Omar Aguilar Strategic Cost Transformation Global Market Offering Leader
Tech companies today face a wide range of unique challenges, including:
• Cloud adoption continues to grow, but apprehensions linger. A recent FileCloud report2 states that 50% of companies do not plan to move mission-critical workloads to the public cloud, while Symantec reports that more than half of organizations face challenges protecting their workloads3.
• Importance of AI is increasingly recognized. Globally, there is a growing realization of AI’s importance, including its potential to provide competitive advantage and change work for the better. According to Deloitte’s 2019 State of AI in the Enterprise Survey4, 38% of US-based IT and line-of-business executives believe AI will be of critical strategic importance within two years, compared to only 10% in 20195.
• Hybrid and multicloud environments are becoming the norm. Companies will likely embrace flexible consumption through hybrid and multicloud environments. Gartner predicts6 that by 2020, 90% of organizations will adopt hybrid infrastructure management. Also, according to a 2019 Kentik report7, 58% of businesses are already using a combination of AWS, Microsoft Azure and Google Cloud in their multicloud networks.
• Edge computing is on the rise. IoT devices, combined with the portability of computing power and AI-driven tools, will likely drive growth of edge computing. According to Gartner8, companies generated only 10% of their data outside a data center or cloud in 2019, but that number will likely grow to 75% over the next six years. IDC predicts that in three years, 45% of IoT-generated data will likely be stored, processed, analyzed and acted upon close to or at the edge of networks.
• The edge AI chip industry is poised for growth. Deloitte’s Technology, Media and Telecommunications Predictions 2020 report9 predicts that more than 750 million edge AI chips will be sold in 2020, and that the market for such chips will likely grow twice as fast as the overall chip market—with smartphones driving the majority of the growth.
• Partnering strategies are shifting. Today’s ultra-competitive, highly complex technology environment demands a shift in partnering strategies. Multiplayer alliances will likely be needed to create end-to-end solutions from best-of-breed assets. Lines will blur as everything-as-a-service (XaaS) expands into security-as-a-service, data-as-a-service and device-as-a-service. Indirect channel partners will remain crucial but must transform to deliver new forms of value.
In this challenging environment, cost management remains a strong imperative for technology companies; however, the prevailing mindset across the sector seems to be expanding from save-to-grow to save-to -transform. Most tech companies continue to have very positive expectations for revenue growth, and many are using cost reduction as a tool to help fund their required growth investments. However, in today’s increasingly digital world, more and more tech companies also recognize the need to transform their operations and capabilities with infrastructure investments in key digital innovations such as robotic process automation, cognitive technologies, business intelligence and cloud-based ERP systems.
These digital technologies and innovations can deliver dramatic improvements in competitiveness, performance, operating efficiency and, increasingly, cost savings. Just as important, they can strengthen a company’s positioning against adverse future events, including economic downturns and digital disruption.
With digital innovation emerging as a critical enabler for both cost reduction and business transformation, we are delighted to present the results from our latest global cost survey. The study includes responses from 169 executives and senior leaders representing major technology companies from around the world.
This report provides an up-to-date view of the cost management practices and trends shaping the future of the tech industry and global business. It also takes a detailed look at how the latest digital technologies and cost management strategies are acting as a catalyst for transformation in a world being actively redefined by digital disruption.
We hope you find these insights useful and look forward to hearing your thoughts and feedback.
4 5
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Executive summary
How is the technology sector different?
Cost reduction is more prevalent in the technology sector than globally across industries. In the tech sector, 79% of the surveyed companies plan to undertake cost reduction initiatives over the next 24 months, significantly higher than the global average across industries (71%). However, the percentage of tech companies with cost reduction targets of 10% or higher is essentially the same as the global average.
The save-to-transform mindset is even more prevalent in the tech sector than globally. The save-to-transform mindset is characterized by a simultaneous strategic focus on sales growth, cost reduction, product profitability, technology implementation, and digital enablement. According to the survey results, this mindset is even more prevalent in the tech sector than globally across industries.
Digital leaders have an even bigger impact in the tech sector than globally. On average, technology sector companies with a designated digital leader have a higher level of technology implementation (+165%) than those without one. That number is even higher than the highly positive impact of digital leaders globally across industries (+118%).
The failure rate for tech sector cost programs is lower than the global average but still high. According to the survey results, 76% of tech companies failed to fully achieve their cost reduction targets, which is not quite as high as the global average across industries (81%).
Technology implementation rates in the tech sector are similar to the global average. In the tech sector, implementation rates for digital technologies over the next 24 months are expected to be very similar to the global averages across industries. The biggest difference is for cognitive/AI technologies, where the tech sector’s expected implementation rate (58%) is lower than the global average (63%).
Technology sector survey results: Detailed insights
Cost reduction is particularly prevalent among tech companies in the United States. For technology companies, the likelihood of undertaking cost reduction initiatives over the next 24 months is significantly higher in the:
86%United States than
77%Asia Pacific
79%Europe
77%Latin America
Cost program failure rates in the tech sector are highest for Latin America and Europe.Failure rates for tech sector cost programs are high (76%), but not as high as the global average across industries (81%).
US tech companies have the most aggressive cost reduction targets.
67%The vast majority of surveyed tech companies have cost reduction targets above 10%.
41%Tech companies in the United States have cost reduction targets of more than 20%.
85%Latin America
68%Asia Pacific
85% and Europe
69%United States
The failure rates are highest in
Lowest in
Technology sector survey results: Detailed insights
Growth expectations in the tech sector are very positive.Technology sector respondents have a very positive growth outlook:
91%reported revenue growth over the past 24 months
92%expect revenue growth over the next 24 months.
Macroeconomic concerns are the top-rated external risk.
72%Tech companies consider macroeconomic concerns are the top-rated external risk, in contrast to the global results where cybersecurity tops the list
66%Cybersecurity and digital disruption are tied for second.
Talent and lack of strategic plans are the top internal risks.The top internal risks in the technology sector are:
29%recruitment, development, and retention of talent
28%lack of strategic plans/execution.
Strategic priorities align with save-to-transform with extra emphasis on transformation. In the technology sector, the top-rated strategic priorities over the next 24 months are all fairly balanced:
82%technology implementation
80%sales growth
77%product profitability
77% technology implementation
Capability development in the tech sector resembles the global results.Capability development resembles the global pattern across all industries. The biggest difference is that tech companies have a significantly greater focus on automation.
54%technology
48%across industries.
Cost reduction drivers vary widely by region.In the technology sector, cost reduction drivers vary widely by region and are expected to evolve significantly over the next 24 months, particularly in the United States and Europe.
Strategic priorities vary significantly by region.Strategic priorities for cost reduction vary significantly by region, with noteworthy changes over time. The priorities of APAC tech companies over the next 24 months appear to be the most closely aligned with a save-to-transform mindset.
Competition is expected to be the top cost reduction driver.Over the next 24 months, the technology sector’s three top drivers for cost reduction are:
76%intensified competition
72%organization and talent
73%digital enablement
71%cost reduction
74%required investment in growth areas.
71%international growth opportunities.
This broad set of balanced priorities typifies the save-to-transform mindset.
6 7
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Executive summary
How is the technology sector different?
Cost reduction is more prevalent in the technology sector than globally across industries. In the tech sector, 79% of the surveyed companies plan to undertake cost reduction initiatives over the next 24 months, significantly higher than the global average across industries (71%). However, the percentage of tech companies with cost reduction targets of 10% or higher is essentially the same as the global average.
The save-to-transform mindset is even more prevalent in the tech sector than globally. The save-to-transform mindset is characterized by a simultaneous strategic focus on sales growth, cost reduction, product profitability, technology implementation, and digital enablement. According to the survey results, this mindset is even more prevalent in the tech sector than globally across industries.
Digital leaders have an even bigger impact in the tech sector than globally. On average, technology sector companies with a designated digital leader have a higher level of technology implementation (+165%) than those without one. That number is even higher than the highly positive impact of digital leaders globally across industries (+118%).
The failure rate for tech sector cost programs is lower than the global average but still high. According to the survey results, 76% of tech companies failed to fully achieve their cost reduction targets, which is not quite as high as the global average across industries (81%).
Technology implementation rates in the tech sector are similar to the global average. In the tech sector, implementation rates for digital technologies over the next 24 months are expected to be very similar to the global averages across industries. The biggest difference is for cognitive/AI technologies, where the tech sector’s expected implementation rate (58%) is lower than the global average (63%).
Technology sector survey results: Detailed insights
Cost reduction is particularly prevalent among tech companies in the United States. For technology companies, the likelihood of undertaking cost reduction initiatives over the next 24 months is significantly higher in the:
86%United States than
77%Asia Pacific
79%Europe
77%Latin America
Cost program failure rates in the tech sector are highest for Latin America and Europe.Failure rates for tech sector cost programs are high (76%), but not as high as the global average across industries (81%).
US tech companies have the most aggressive cost reduction targets.
67%The vast majority of surveyed tech companies have cost reduction targets above 10%.
41%Tech companies in the United States have cost reduction targets of more than 20%.
85%Latin America
68%Asia Pacific
85% and Europe
69%United States
The failure rates are highest in
Lowest in
Technology sector survey results: Detailed insights
Growth expectations in the tech sector are very positive.Technology sector respondents have a very positive growth outlook:
91%reported revenue growth over the past 24 months
92%expect revenue growth over the next 24 months.
Macroeconomic concerns are the top-rated external risk.
72%Tech companies consider macroeconomic concerns are the top-rated external risk, in contrast to the global results where cybersecurity tops the list
66%Cybersecurity and digital disruption are tied for second.
Talent and lack of strategic plans are the top internal risks.The top internal risks in the technology sector are:
29%recruitment, development, and retention of talent
28%lack of strategic plans/execution.
Strategic priorities align with save-to-transform with extra emphasis on transformation. In the technology sector, the top-rated strategic priorities over the next 24 months are all fairly balanced:
82%technology implementation
80%sales growth
77%product profitability
77% technology implementation
Capability development in the tech sector resembles the global results.Capability development resembles the global pattern across all industries. The biggest difference is that tech companies have a significantly greater focus on automation.
54%technology
48%across industries.
Cost reduction drivers vary widely by region.In the technology sector, cost reduction drivers vary widely by region and are expected to evolve significantly over the next 24 months, particularly in the United States and Europe.
Strategic priorities vary significantly by region.Strategic priorities for cost reduction vary significantly by region, with noteworthy changes over time. The priorities of APAC tech companies over the next 24 months appear to be the most closely aligned with a save-to-transform mindset.
Competition is expected to be the top cost reduction driver.Over the next 24 months, the technology sector’s three top drivers for cost reduction are:
76%intensified competition
72%organization and talent
73%digital enablement
71%cost reduction
74%required investment in growth areas.
71%international growth opportunities.
This broad set of balanced priorities typifies the save-to-transform mindset.
6 7
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Technology sector survey results: Detailed insights
Strategic cost actions will be favored in the future.Looking ahead to the next 24 months, tech companies expect to favor
62%strategic cost reduction actions
Over
58%tactical cost actions
Tech companies report a high level of cost management maturity.Overall cost management maturity levels in the technology sector are significantly higher than the global averages across industries. The percentage of companies that rate themselves high maturity are:
43%technology
However, maturity ratings vary widely by region.
35%global average
Erosion of savings is the top barrier to cost reduction. In the technology sector, the three top barriers to successful cost reduction are:
71%erosion of savings
67%lack of an effective ERP system.
68%implementation challenges
Tech companies have favored tactical cost actions. According to the survey results, technology companies tended to favor tactical cost actions over strategic cost actions during the past 24 months. This resembles the global pattern across industries but is even more pronounced.
Lessons learned. The top lessons learned in the technology sector are:
76%design a solid tracking and reporting process
76%assess, validate, and adjust targets reasonably to reflect reality throughout the implementation phase
75%and invest in technology improvements to enable data availability, reliability, and decision-making processes
Cloud leads the pack. Among the technologies covered by the survey, the most widely implemented in the tech sector over the past 24 months was:
51%cloud
44%business intelligence
36%cognitive
High levels of technology implementation are expected.Consistent with the global results across industries, the technologies expected to be most actively implemented in the tech sector over the next 24 months are:
63%automation
59%cognitive
Digital and technology solutions applied to cost management in the technology sector
Most technology implementations meet or exceed expectations.When implementing each of the technologies covered by the survey, more than
72%of tech companies had their expectations met or exceeded.
Top reasons for applying digital technologies.In the tech sector, reducing costs and increasing productivity is the main reason for applying cloud, robotic process automation (RPA), and cognitive/AI technologies.
Digital leaders make a difference.
+165%Although the impact varies by region and technology, on average tech companies with a designated digital leader achieve much higher levels of technology implementation
+118%which is even greater than the impact of a digital leader globally across industries.
Digital disruption and cybersecurity are critical risks.Cybersecurity and digital disruption are both recognized as critical risks in the technology sector. Meanwhile, technology implementation has emerged as the tech sector’s top strategic priority over the next 24 months.
Save-to-grow.Most tech companies have been firmly grounded in save-to-grow mode where cost and growth are the main business levers, with talent (including capabilities) as another key component. In this mode, cost reduction is a high priority, with cost savings used to fund growth initiatives and strategic investments that support a differentiated business strategy.
Save-to-grow expands into save-to-transform.Many tech companies are now shifting into save-to-transform mode, with the save-to-grow mindset expanding to include a strong focus on digital enablement and technologies. This shift can transform a company and help it capitalize on digital opportunities, while at the same time positioning the business for potential adversity that may be on the horizon— such as an economic downturn or credit crisis—using digital innovations to unlock new levels of cost savings, efficiency, and financial performance.
Save-to-transform as a catalyst for embracing digital disruption
However, implementation levels varied widely by technology and region.
The technology expected to be least actively implemented is
47% cloud
most likely because current implementation levels for cloud are already very high.
8 9
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Technology sector survey results: Detailed insights
Strategic cost actions will be favored in the future.Looking ahead to the next 24 months, tech companies expect to favor
62%strategic cost reduction actions
Over
58%tactical cost actions
Tech companies report a high level of cost management maturity.Overall cost management maturity levels in the technology sector are significantly higher than the global averages across industries. The percentage of companies that rate themselves high maturity are:
43%technology
However, maturity ratings vary widely by region.
35%global average
Erosion of savings is the top barrier to cost reduction. In the technology sector, the three top barriers to successful cost reduction are:
71%erosion of savings
67%lack of an effective ERP system.
68%implementation challenges
Tech companies have favored tactical cost actions. According to the survey results, technology companies tended to favor tactical cost actions over strategic cost actions during the past 24 months. This resembles the global pattern across industries but is even more pronounced.
Lessons learned. The top lessons learned in the technology sector are:
76%design a solid tracking and reporting process
76%assess, validate, and adjust targets reasonably to reflect reality throughout the implementation phase
75%and invest in technology improvements to enable data availability, reliability, and decision-making processes
Cloud leads the pack. Among the technologies covered by the survey, the most widely implemented in the tech sector over the past 24 months was:
51%cloud
44%business intelligence
36%cognitive
High levels of technology implementation are expected.Consistent with the global results across industries, the technologies expected to be most actively implemented in the tech sector over the next 24 months are:
63%automation
59%cognitive
Digital and technology solutions applied to cost management in the technology sector
Most technology implementations meet or exceed expectations.When implementing each of the technologies covered by the survey, more than
72%of tech companies had their expectations met or exceeded.
Top reasons for applying digital technologies.In the tech sector, reducing costs and increasing productivity is the main reason for applying cloud, robotic process automation (RPA), and cognitive/AI technologies.
Digital leaders make a difference.
+165%Although the impact varies by region and technology, on average tech companies with a designated digital leader achieve much higher levels of technology implementation
+118%which is even greater than the impact of a digital leader globally across industries.
Digital disruption and cybersecurity are critical risks.Cybersecurity and digital disruption are both recognized as critical risks in the technology sector. Meanwhile, technology implementation has emerged as the tech sector’s top strategic priority over the next 24 months.
Save-to-grow.Most tech companies have been firmly grounded in save-to-grow mode where cost and growth are the main business levers, with talent (including capabilities) as another key component. In this mode, cost reduction is a high priority, with cost savings used to fund growth initiatives and strategic investments that support a differentiated business strategy.
Save-to-grow expands into save-to-transform.Many tech companies are now shifting into save-to-transform mode, with the save-to-grow mindset expanding to include a strong focus on digital enablement and technologies. This shift can transform a company and help it capitalize on digital opportunities, while at the same time positioning the business for potential adversity that may be on the horizon— such as an economic downturn or credit crisis—using digital innovations to unlock new levels of cost savings, efficiency, and financial performance.
Save-to-transform as a catalyst for embracing digital disruption
However, implementation levels varied widely by technology and region.
The technology expected to be least actively implemented is
47% cloud
most likely because current implementation levels for cloud are already very high.
8 9
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
LATAM21 responses
Europe47 responses
Canada3 responses
South Africa2 responses
APAC20 responses
US25 responses
Deloitte Consulting LLP (Deloitte or Deloitte Consulting) engaged Dynata to conduct a global cost-management survey to better understand business leaders’ perspectives on current and future cost-reduction initiatives withinlarge companies, multinationals, and other companies that are representative of the regions surveyed.
Study objectives
Understand factors, approaches, actions, and targets related to cost initiatives
Assess the effectiveness of the cost actions, including lessons learned from previous efforts
Understand the drivers and scope of past and future cost initiatives
Provide context on how digital disruption and advanced digital technologies are affecting cost management
Assess industry results, and provide insights on different behaviors related to cost reduction
MethodologyData was collected through detailed online surveys conducted between November and December 2018.
January February March April May June July August September October November December
About the survey
FirmographicsThe global survey of more than 1,200 executives and senior leaders with direct involvement in cost management decisions and actions included 169 respondents from the technology sector.
10 1110
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
LATAM21 responses
Europe47 responses
Canada3 responses
South Africa2 responses
APAC20 responses
US25 responses
Deloitte Consulting LLP (Deloitte or Deloitte Consulting) engaged Dynata to conduct a global cost-management survey to better understand business leaders’ perspectives on current and future cost-reduction initiatives withinlarge companies, multinationals, and other companies that are representative of the regions surveyed.
Study objectives
Understand factors, approaches, actions, and targets related to cost initiatives
Assess the effectiveness of the cost actions, including lessons learned from previous efforts
Understand the drivers and scope of past and future cost initiatives
Provide context on how digital disruption and advanced digital technologies are affecting cost management
Assess industry results, and provide insights on different behaviors related to cost reduction
MethodologyData was collected through detailed online surveys conducted between November and December 2018.
January February March April May June July August September October November December
About the survey
FirmographicsThe global survey of more than 1,200 executives and senior leaders with direct involvement in cost management decisions and actions included 169 respondents from the technology sector.
10 1110
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
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100
0
10
20
30
40
50
60
70
80
90
100
Likely Neutral Unlikely
71%
79%
20%16%
8% 5%
30%
37%
31% 30%
37%
30%
Global Technology
% o
f tot
al r
espo
nden
ts
79% of technology respondents plan to undertake cost reduction initiatives compared to 71% globally
67% of respondents report targets above 10% compared to 68% globally
Less than 10% 10% to less than 20% More than 20%
Likelihood Cost targets
Most findings from this year’s global cost-management survey are directionally consistent across all industries and major geographic regions. However, there are a handful of key differences between the technology sector results and the global survey results, which include data from all industries.
Cost reduction is more prevalent in the technology sector than globally across industriesIn the tech sector, 79% of the surveyed companies plan to undertake cost reduction initiatives over the next 24 months, significantly higher than the global average across industries (71%). Meanwhile, the percentage of tech companies with
cost reduction targets of 10% or higher is essentially the same as the global average (67% in the tech sector versus 68% globally across industries).
Figure 1. Cost reduction trends
131212
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sectorSave-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
How is the technology sector different?
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
Likely Neutral Unlikely
71%
79%
20%16%
8% 5%
30%
37%
31% 30%
37%
30%
Global Technology
% o
f tot
al r
espo
nden
ts
79% of technology respondents plan to undertake cost reduction initiatives compared to 71% globally
67% of respondents report targets above 10% compared to 68% globally
Less than 10% 10% to less than 20% More than 20%
Likelihood Cost targets
Most findings from this year’s global cost-management survey are directionally consistent across all industries and major geographic regions. However, there are a handful of key differences between the technology sector results and the global survey results, which include data from all industries.
Cost reduction is more prevalent in the technology sector than globally across industriesIn the tech sector, 79% of the surveyed companies plan to undertake cost reduction initiatives over the next 24 months, significantly higher than the global average across industries (71%). Meanwhile, the percentage of tech companies with
cost reduction targets of 10% or higher is essentially the same as the global average (67% in the tech sector versus 68% globally across industries).
Figure 1. Cost reduction trends
131212
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sectorSave-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
0
10
20
30
40
50
60
70
80
Did not meet goalsMet goalsExceeded goals
% o
f tot
al r
espo
nden
ts
76%81%
18%14%
6%5%
Global
Global
Technology
Technology34%
34% 30%
19%
10%40%
1%
19%
11%2%
68% 70%
Realized 1% to 24% of the savings targetRealized 25% to 49% of the savings targetRealized 50% to 74% of the savings targetRealized 75% to 99% of the savings targetRealized none (0%) of the savings target
76% of respondents failed to fully meet their targets
0
10
20
30
40
50
60
70
80
Sales growth
Cost reduction
Balance sheet management
Productprofitability
Organization and talent
Technology implementation
Digitalenablement
% o
f tot
al r
espo
nden
ts
72%80%
68% 71%61%
69% 73% 77%68%
76% 73%82%
69%73%
Global Technology
72 8068 7161 6973 7768 7673 8269 73
Technology implementation is the top priority over the next 24 months for the technology sector and globally
The failure rate for tech sector cost programs is lower than the global average but still highAccording to the survey results, 76% of tech companies failed to fully achieve their cost reduction targets, which is
not quite as high as the global average across industries (81%) (see figure 2).
Figure 2. Cost program success analysis
The save-to-transform mindset is even more prevalent in the tech sector than globally The survey results show that the save-to-transform mindset is even more prevalent in the tech sector than globally across industries. This cost management philosophy is characterized by a simultaneous strategic focus on sales growth, cost reduction, product profitability, technology implementation, and digital enablement. Relative to the global averages across
industries, tech sector respondents report higher priority levels in all of those areas: cost (+3 percentage points), digital enablement (+4 percentage points), profitability (+4 percentage points), technology (+9 percentage points), and growth (+8 percentage points) (see figure 3).
Figure 3. Strategic priorities (next 24 months)
Survey findings• Out of the 76% of technology sector respondents that failed to meet their targets, 70% were able to realize more than 50% of
their savings target, which is similar to the global average across all industries (68%).
• The percentage of tech companies that achieved 75% - 99% of their savings targets is 6 percentage points higher than the global average across industries (40% for tech companies versus 34% globally).
Global Technology
% o
f tot
al r
espo
nden
ts
43% 42% 37%
In process of implementationNot implemented but planned
Business intelligence(not including cognitive or AI)
Cloud solutionsAutomation: Robotic process automation
Cognitive technologies: AI and machine learning
-2%
+2%-6%
38%
24% 24% 20%
14%
26%17%
18%14%
39% 39% 33% 37% 42% 40% 34%
62% 63%59%
47%
63%59% 58%
47%
0
10
20
30
40
50
60
Global Technology
Automation: Robotics Process Automation
Average Cognitive technologies: AI and machine learning
Business intelligence (not including Cognitive or AI)
Cloud solutions
45%
17%
17%
17% 23
% 31%
30%
37%
29%
35%
29% 39
% 53%
55%
41%
48%
(No designated leader)Level of technology implementation
0
10
20
30
40
50
60
17%
17%
9%
4%
118%
165%
222%
775%
10%
8%
17%
23%
30%
31%
190%
413%
(Designated leader)Level of technology implementation
129%
109%
53%77%
77%
Technology implementation rates in the tech sector are similar to the global average In the tech sector, implementation rates for digital technologies over the next 24 months are expected to be very similar to the global averages across industries. The biggest difference is for cognitive technologies, where the
expected implementation rate for tech companies is 58% (in-process or planned), 6% lower than the global average (63% in-process or planned) (see figure 4).
Figure 4. Technology implementation levels (next 24 months)
Digital leaders have an even bigger impact in the tech sector than globally On average, technology sector companies with a designated digital leader have a higher level of technology implementation (+165%) than those without one. That number is even higher than the highly
positive impact of digital leaders globally across industries (+118%) (see figure 5).
Figure 5. Impact of a designated digital leader
*Averages calculated for global and life sciences results are weighted averages.
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Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
0
10
20
30
40
50
60
70
80
Did not meet goalsMet goalsExceeded goals
% o
f tot
al r
espo
nden
ts
76%81%
18%14%
6%5%
Global
Global
Technology
Technology34%
34% 30%
19%
10%40%
1%
19%
11%2%
68% 70%
Realized 1% to 24% of the savings targetRealized 25% to 49% of the savings targetRealized 50% to 74% of the savings targetRealized 75% to 99% of the savings targetRealized none (0%) of the savings target
76% of respondents failed to fully meet their targets
0
10
20
30
40
50
60
70
80
Sales growth
Cost reduction
Balance sheet management
Productprofitability
Organization and talent
Technology implementation
Digitalenablement
% o
f tot
al r
espo
nden
ts
72%80%
68% 71%61%
69% 73% 77%68%
76% 73%82%
69%73%
Global Technology
72 8068 7161 6973 7768 7673 8269 73
Technology implementation is the top priority over the next 24 months for the technology sector and globally
The failure rate for tech sector cost programs is lower than the global average but still highAccording to the survey results, 76% of tech companies failed to fully achieve their cost reduction targets, which is
not quite as high as the global average across industries (81%) (see figure 2).
Figure 2. Cost program success analysis
The save-to-transform mindset is even more prevalent in the tech sector than globally The survey results show that the save-to-transform mindset is even more prevalent in the tech sector than globally across industries. This cost management philosophy is characterized by a simultaneous strategic focus on sales growth, cost reduction, product profitability, technology implementation, and digital enablement. Relative to the global averages across
industries, tech sector respondents report higher priority levels in all of those areas: cost (+3 percentage points), digital enablement (+4 percentage points), profitability (+4 percentage points), technology (+9 percentage points), and growth (+8 percentage points) (see figure 3).
Figure 3. Strategic priorities (next 24 months)
Survey findings• Out of the 76% of technology sector respondents that failed to meet their targets, 70% were able to realize more than 50% of
their savings target, which is similar to the global average across all industries (68%).
• The percentage of tech companies that achieved 75% - 99% of their savings targets is 6 percentage points higher than the global average across industries (40% for tech companies versus 34% globally).
Global Technology
% o
f tot
al r
espo
nden
ts
43% 42% 37%
In process of implementationNot implemented but planned
Business intelligence(not including cognitive or AI)
Cloud solutionsAutomation: Robotic process automation
Cognitive technologies: AI and machine learning
-2%
+2%-6%
38%
24% 24% 20%
14%
26%17%
18%14%
39% 39% 33% 37% 42% 40% 34%
62% 63%59%
47%
63%59% 58%
47%
0
10
20
30
40
50
60
Global Technology
Automation: Robotics Process Automation
Average Cognitive technologies: AI and machine learning
Business intelligence (not including Cognitive or AI)
Cloud solutions
45%
17%
17%
17% 23
% 31%
30%
37%
29%
35%
29% 39
% 53%
55%
41%
48%
(No designated leader)Level of technology implementation
0
10
20
30
40
50
60
17%
17%
9%
4%
118%
165%
222%
775%
10%
8%
17%
23%
30%
31%
190%
413%
(Designated leader)Level of technology implementation
129%
109%
53%77%
77%
Technology implementation rates in the tech sector are similar to the global average In the tech sector, implementation rates for digital technologies over the next 24 months are expected to be very similar to the global averages across industries. The biggest difference is for cognitive technologies, where the
expected implementation rate for tech companies is 58% (in-process or planned), 6% lower than the global average (63% in-process or planned) (see figure 4).
Figure 4. Technology implementation levels (next 24 months)
Digital leaders have an even bigger impact in the tech sector than globally On average, technology sector companies with a designated digital leader have a higher level of technology implementation (+165%) than those without one. That number is even higher than the highly
positive impact of digital leaders globally across industries (+118%) (see figure 5).
Figure 5. Impact of a designated digital leader
*Averages calculated for global and life sciences results are weighted averages.
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Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
FirmographicsGlobal information for the technology sector was collected to provide meaningful insights across regions. Within TMT (technology, media, and telecommunications), the technology sector had the largest number of respondents (169), representing 76% of all TMT responses (see figure 6).
Figure 6. Respondents’ breakdown by industry and sector
Industry breakdown:Total respondents (%)
Technology, Media & Telecommunications Sector breakdown: number and percentage of responses by sector and region
27%
13%
7%2%
12%
18%
21%
Technology (169)
Telecommunications (35)
Media & Entertainment (14)
Other
Consumer and Industrial Products
Financial Services
Technology, Media and Telecommunications
Life Science and Health Care
Energy and Resources
Public Sector
Other
Total
41
27
68
72
10
5
223
SA
Canada
APAC
EMEA
LATAM
USA 29
26
47
62
4
1 3 11
6
5 4
15 5 1
1
1
8 8 8
Management-level breakdown(% of respondents by level)
Management-level breakdown(% of respondents by level and region)
29%
46%
8%
17%
Executive Managment (enabling functions)*Executive Management (business units)**President, CEO CFO, COO
APAC (Tech)Europe (Tech)LATAM (Tech)US (Tech)
34%
3%
10%
52%
19%
12%
4%
65%
26%
11%
15%
49%
34%
31%
27%
8%
54% of respondents were executive
management, 29% were Presidents or
CEOs, and the remaining 17% were
CFOs and COOs
Only relevant executive positions with cost management decision capabilities were surveyed: 54% of respondents were executive management, 29% were Presidents or CEOs, and the remaining 17% were CFOs and COOs (see figure 7).
Figure 7. Respondents’ breakdown by management level and region
* Executives Management (enabling functions): VP or above in finance, logistics, IT, HR, marketing, etc.** Executives Management (business functions): VP or above business units, regions, or countries
16 17
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
FirmographicsGlobal information for the technology sector was collected to provide meaningful insights across regions. Within TMT (technology, media, and telecommunications), the technology sector had the largest number of respondents (169), representing 76% of all TMT responses (see figure 6).
Figure 6. Respondents’ breakdown by industry and sector
Industry breakdown:Total respondents (%)
Technology, Media & Telecommunications Sector breakdown: number and percentage of responses by sector and region
27%
13%
7%2%
12%
18%
21%
Technology (169)
Telecommunications (35)
Media & Entertainment (14)
Other
Consumer and Industrial Products
Financial Services
Technology, Media and Telecommunications
Life Science and Health Care
Energy and Resources
Public Sector
Other
Total
41
27
68
72
10
5
223
SA
Canada
APAC
EMEA
LATAM
USA 29
26
47
62
4
1 3 11
6
5 4
15 5 1
1
1
8 8 8
Management-level breakdown(% of respondents by level)
Management-level breakdown(% of respondents by level and region)
29%
46%
8%
17%
Executive Managment (enabling functions)*Executive Management (business units)**President, CEO CFO, COO
APAC (Tech)Europe (Tech)LATAM (Tech)US (Tech)
34%
3%
10%
52%
19%
12%
4%
65%
26%
11%
15%
49%
34%
31%
27%
8%
54% of respondents were executive
management, 29% were Presidents or
CEOs, and the remaining 17% were
CFOs and COOs
Only relevant executive positions with cost management decision capabilities were surveyed: 54% of respondents were executive management, 29% were Presidents or CEOs, and the remaining 17% were CFOs and COOs (see figure 7).
Figure 7. Respondents’ breakdown by management level and region
* Executives Management (enabling functions): VP or above in finance, logistics, IT, HR, marketing, etc.** Executives Management (business functions): VP or above business units, regions, or countries
16 17
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
More than 50% of technology respondents across regions reported revenues above $1 billion, with 100% of US respondents and 69% of European respondents above that threshold (see figure 8).
Figure 8. Respondents’ annual revenue (US dollars)
$200M toless than $500M
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
0
10
20
30
40
50
60
$500M toless than $1B
$1B toless than $5B
$5B toless than $20B
$20B toless than $60B
Over $60B
0% 0%
17%21%
8%12%
15%
26%
48%
15%
32% 31%
46%45%
11%15%
7%5%
17%
4%0%
9%
3%
15%
Of the technology sector respondents surveyed, 38% had revenues in excess of $5 billion
Note: The survey was conducted in local currencies. For analysis purposes they have been converted to US dollars.
Lessthan 1,000
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
0
10
20
30
40
50
60
1,000to 2, 499
2,500to 4,900
5,000 to 9,999
10,000to 24,000
25,000to 49,999
50,000to 99,999
Morethan 100,000
3%
8%6% 5%
7% 7%
12%12%11%
37%
19%19%
15% 15% 15% 15%
24% 24%24%
3%5%
13%
8%
17%
7%
23%
11%
6%10%
4%
11%
5%
42% of LATAM technology sector respondents had more than 25,000 employees
60% of technology sector respondents globally had more than 5,000 employees
In all regions except Asia Pacific, at least a third of technology sector respondents had more than 25,000 employees, and a significant percentage had more than 100,000 employees, particularly in Europe (11%) and the United States (10%) (see figure 9).
Figure 9: Respondents’ employee headcount
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Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
More than 50% of technology respondents across regions reported revenues above $1 billion, with 100% of US respondents and 69% of European respondents above that threshold (see figure 8).
Figure 8. Respondents’ annual revenue (US dollars)
$200M toless than $500M
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
0
10
20
30
40
50
60
$500M toless than $1B
$1B toless than $5B
$5B toless than $20B
$20B toless than $60B
Over $60B
0% 0%
17%21%
8%12%
15%
26%
48%
15%
32% 31%
46%45%
11%15%
7%5%
17%
4%0%
9%
3%
15%
Of the technology sector respondents surveyed, 38% had revenues in excess of $5 billion
Note: The survey was conducted in local currencies. For analysis purposes they have been converted to US dollars.
Lessthan 1,000
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
0
10
20
30
40
50
60
1,000to 2, 499
2,500to 4,900
5,000 to 9,999
10,000to 24,000
25,000to 49,999
50,000to 99,999
Morethan 100,000
3%
8%6% 5%
7% 7%
12%12%11%
37%
19%19%
15% 15% 15% 15%
24% 24%24%
3%5%
13%
8%
17%
7%
23%
11%
6%10%
4%
11%
5%
42% of LATAM technology sector respondents had more than 25,000 employees
60% of technology sector respondents globally had more than 5,000 employees
In all regions except Asia Pacific, at least a third of technology sector respondents had more than 25,000 employees, and a significant percentage had more than 100,000 employees, particularly in Europe (11%) and the United States (10%) (see figure 9).
Figure 9: Respondents’ employee headcount
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Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Technology sector results:Key insights
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 On average, 79% of tech companies plan to undertake cost reduction initiatives, significantly higher than the global average
across all industries (71%).2 In the tech sector, only 5% of respondents say they are unlikely to undertake cost reduction initiatives over the next 24
months, compared to 8% globally across industries.3 US tech companies are the most likely to undertake cost reduction initiatives (86%), higher than the overall averages for the
technology sector (79%) and globally across industries (71%).4 In Latin America, all tech sector respondents view their likelihood of undertaking cost reduction as either likely (77%) or
neutral (23%).
Cost reduction is particularly prevalent among tech companies in the United StatesFor technology companies, the likelihood of undertaking cost reduction initiatives over the next 24 months is significantly
higher in the United States (86%) than in Europe (79%), Latin America (77%), and Asia Pacific (77%) (see figure 10).
Figure 10: Likelihood of cost reduction over the next 24 months
Likely Neutral Unlikely
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
71%
86%
% o
f tot
al r
espo
nden
ts
0
10
20
30
40
50
60
70
80
90
79%
20%16%
7%
13%
18%
5% 7% 5%9%
0%
23%
8%
79% of technology sector respondents plan to undertake cost reduction initiatives
1
1
3
4
4
22
77% 77%79%
20 21
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Technology sector results:Key insights
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 On average, 79% of tech companies plan to undertake cost reduction initiatives, significantly higher than the global average
across all industries (71%).2 In the tech sector, only 5% of respondents say they are unlikely to undertake cost reduction initiatives over the next 24
months, compared to 8% globally across industries.3 US tech companies are the most likely to undertake cost reduction initiatives (86%), higher than the overall averages for the
technology sector (79%) and globally across industries (71%).4 In Latin America, all tech sector respondents view their likelihood of undertaking cost reduction as either likely (77%) or
neutral (23%).
Cost reduction is particularly prevalent among tech companies in the United StatesFor technology companies, the likelihood of undertaking cost reduction initiatives over the next 24 months is significantly
higher in the United States (86%) than in Europe (79%), Latin America (77%), and Asia Pacific (77%) (see figure 10).
Figure 10: Likelihood of cost reduction over the next 24 months
Likely Neutral Unlikely
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
71%
86%
% o
f tot
al r
espo
nden
ts
0
10
20
30
40
50
60
70
80
90
79%
20%16%
7%
13%
18%
5% 7% 5%9%
0%
23%
8%
79% of technology sector respondents plan to undertake cost reduction initiatives
1
1
3
4
4
22
77% 77%79%
20 21
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 On average, 67% of technology sector respondents have cost reduction targets of 10% or higher, on par with the global
average across industries (68%).2 The percentage of tech companies with targets above 20% is higher than the overall tech sector average (30%) and the global
average across industries (31%) in the United States (41%), Latin America (35%), and Europe (32%).3 Asia Pacific (at 60%) has the lowest percentage of tech companies with targets of 10% or more, much lower than the global
average (68%) and overall tech sector average (67%).
Survey findings1 LATAM and Europe have the highest failure rate than the rest of the regions at 85%; APAC has the lowest failure rate
at 68%, lower than the global (81%) and technology sector (76%) averages. 2 APAC has the highest percentage of companies exceeding goals at 8%, whereas LATAM has 0% respondents
exceeding goals.3 Technology sector at 18% has higher rates at meeting goals than global average companies (14%); specially, due to
the performance of US and APAC (both at 24%).
US tech companies have the most aggressive cost reduction targetsThe vast majority of surveyed tech companies (67%) have cost reduction targets above 10%. Tech companies in the United States have the most aggressive targets, with 41%
pursuing cost reduction of more than 20%. APAC tech companies have the least aggressive targets, with 77% pursuing cost reductions of less than 20% (see figure 11).
Figure 11. Cost targets
Cost program failure rates in the tech sector are highest for Latin America and EuropeFailure rates for tech sector cost programs are high (76%), but not as high as the global average across industries (81%). The failure rates are highest in Latin America (85%)
and Europe (85%), and lowest in Asia Pacific (68%) and the United States (69%) (see figure 12).
Figure 12. Cost program success and failure analysis
10% to less than 20% More than 20%
30% 30%
% o
f tot
al r
espo
nden
ts
0
10
20
30
40
50
60
70
23%
Less than 10%
30%
10%
37% 37% 38% 34%
48%37%
30%
41%32%
35%
23%
Note: Respondents that selected "no specific targets were established" were not plotted in the graph
31%
40%
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
1 11 1
22 2
3
3
Most technology sector respondents (67%) reported targets above 10%
Met goals Exceeded goals0
10
20
30
40
50
60
70
80
90
100
Did not meet goals
81%76%
14%18%
24%
5% 6% 7%0%
4% 8%11%
24%15%
85%
68%69%
85%
% o
f tot
al r
espo
nden
ts
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
11
1 1
2
233
3 3
Survey findings1 Over the past 24 months, LATAM tech companies had the most positive revenue growth results (96%), higher than the
overall average for the technology sector (91%) as well as the global average across industries (86%).
2 Over the next 24 months, APAC tech companies have the most positive growth outlook (98%), higher than the overall average for the tech sector (92%) as well as the global average across industries (86%).
3 In Latin America, the percentage of tech companies expecting future revenue growth (92%) is 4 points lower than the percentage of tech companies reporting past revenue growth (96%).
Growth expectations in the tech sector are very positive Technology sector respondents have a very positive growth outlook, with 91% reporting revenue growth over the past 24 months and 92% expecting revenue growth over the next 24 months. Both of those numbers exceed the global averages across industries (86% for both). LATAM tech
companies had the most positive revenue results over the past 24 months (96%), while APAC tech companies have the most positive growth expectations over the next 24 months (98%) (see figure 13).
Figure 13: Revenue performance and expectations for growth
0
10
20
30
40
50
60
70
80
90
100
86%91%
86%96% 92%91%
7% 6%0%
4% 4% 4% 4%6% 7% 7%7%2%
79%
0
10
20
30
40
50
60
70
80
90
100
Past 24 months
% o
f tot
al r
espo
nden
ts%
of t
otal
res
pond
ents
Next 24 months
Increased Remained the same Decreased
Increase Anticipate flat top line Decrease
86%92% 92%
4% 4%6% 3%7%10%
0%0%
98%
83%
8% 8%2%
91%
5%
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
1
11
2
22
3
3
22 23
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 On average, 67% of technology sector respondents have cost reduction targets of 10% or higher, on par with the global
average across industries (68%).2 The percentage of tech companies with targets above 20% is higher than the overall tech sector average (30%) and the global
average across industries (31%) in the United States (41%), Latin America (35%), and Europe (32%).3 Asia Pacific (at 60%) has the lowest percentage of tech companies with targets of 10% or more, much lower than the global
average (68%) and overall tech sector average (67%).
Survey findings1 LATAM and Europe have the highest failure rate than the rest of the regions at 85%; APAC has the lowest failure rate
at 68%, lower than the global (81%) and technology sector (76%) averages. 2 APAC has the highest percentage of companies exceeding goals at 8%, whereas LATAM has 0% respondents
exceeding goals.3 Technology sector at 18% has higher rates at meeting goals than global average companies (14%); specially, due to
the performance of US and APAC (both at 24%).
US tech companies have the most aggressive cost reduction targetsThe vast majority of surveyed tech companies (67%) have cost reduction targets above 10%. Tech companies in the United States have the most aggressive targets, with 41%
pursuing cost reduction of more than 20%. APAC tech companies have the least aggressive targets, with 77% pursuing cost reductions of less than 20% (see figure 11).
Figure 11. Cost targets
Cost program failure rates in the tech sector are highest for Latin America and EuropeFailure rates for tech sector cost programs are high (76%), but not as high as the global average across industries (81%). The failure rates are highest in Latin America (85%)
and Europe (85%), and lowest in Asia Pacific (68%) and the United States (69%) (see figure 12).
Figure 12. Cost program success and failure analysis
10% to less than 20% More than 20%
30% 30%
% o
f tot
al r
espo
nden
ts
0
10
20
30
40
50
60
70
23%
Less than 10%
30%
10%
37% 37% 38% 34%
48%37%
30%
41%32%
35%
23%
Note: Respondents that selected "no specific targets were established" were not plotted in the graph
31%
40%
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
1 11 1
22 2
3
3
Most technology sector respondents (67%) reported targets above 10%
Met goals Exceeded goals0
10
20
30
40
50
60
70
80
90
100
Did not meet goals
81%76%
14%18%
24%
5% 6% 7%0%
4% 8%11%
24%15%
85%
68%69%
85%
% o
f tot
al r
espo
nden
ts
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
11
1 1
2
233
3 3
Survey findings1 Over the past 24 months, LATAM tech companies had the most positive revenue growth results (96%), higher than the
overall average for the technology sector (91%) as well as the global average across industries (86%).
2 Over the next 24 months, APAC tech companies have the most positive growth outlook (98%), higher than the overall average for the tech sector (92%) as well as the global average across industries (86%).
3 In Latin America, the percentage of tech companies expecting future revenue growth (92%) is 4 points lower than the percentage of tech companies reporting past revenue growth (96%).
Growth expectations in the tech sector are very positive Technology sector respondents have a very positive growth outlook, with 91% reporting revenue growth over the past 24 months and 92% expecting revenue growth over the next 24 months. Both of those numbers exceed the global averages across industries (86% for both). LATAM tech
companies had the most positive revenue results over the past 24 months (96%), while APAC tech companies have the most positive growth expectations over the next 24 months (98%) (see figure 13).
Figure 13: Revenue performance and expectations for growth
0
10
20
30
40
50
60
70
80
90
100
86%91%
86%96% 92%91%
7% 6%0%
4% 4% 4% 4%6% 7% 7%7%2%
79%
0
10
20
30
40
50
60
70
80
90
100
Past 24 months
% o
f tot
al r
espo
nden
ts%
of t
otal
res
pond
ents
Next 24 months
Increased Remained the same Decreased
Increase Anticipate flat top line Decrease
86%92% 92%
4% 4%6% 3%7%10%
0%0%
98%
83%
8% 8%2%
91%
5%
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
1
11
2
22
3
3
22 23
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 The top-rated external risks among technology sector respondents are macroeconomic concerns (72%), followed by cybersecurity
(66%) and digital disruption (66%).2 Globally, cybersecurity (62%) and digital disruption (61%) are among the three top risks as well, with macroeconomics in a three-way tie
for third at 59%.3 Overall ratings for external risks in the technology sector tend to be significantly higher than the global averages across industries.
Region-specific findings for the technology sectorA United States – The top-rated external risks are macroeconomic concerns (69%), new market entrants (69%), and digital disruption
(69%); credit risks rank last at 48%, the lowest rating among all regions.B Latin America – Currency fluctuations are the top-rated risk in Latin America at 81%, the highest rating among all regions; unlike all
other regions, macroeconomic concerns are the lowest-rated (50%).C Europe – Macroeconomic concerns are the top-rated external risk (79%); political climate is the lowest-rated (57%).D Asia Pacific – Macroeconomic concerns are the top-rated external risk (77%); currency fluctuations are the lowest-rated (at 55%).
Macroeconomic concerns are the top-rated external riskIn contrast to the global results where cybersecurity tops the list of external risks, macroeconomic concerns are the top-rated external risk (72%) for tech companies. Cybersecurity
and digital disruption are tied for second, both at 66% (see figure 14).
Figure 14. Top external risks
0
10
20
30
40
50
60
70
80
Global Technology
% o
f tot
al r
espo
nden
ts
59% 59% 58% 59% 57%62%
57%61%
64%
72%
63% 65%60%
66% 66%61%
1
2 21 1
Political climate Macroeconomic concerns Currency fluctuations Commodity price fluctuations
Credit risks Cyber security concerns New market entrants Digital disruption
0
10
20
30
40
50
60
70
80
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts
59%
69% 69% 69%69% 69%
79%
54%50%
55%
62%58% 58% 58%
70% 70%
57%
64%68%
63% 63% 61%
72%
60%
76% 77%
56%
48%
55% 55%
65%
81%
A
A
A A
B
B D
D
C
C
Survey findings1 The top internal risk for tech companies is talent (29%), followed by lack of strategic plans/execution (28%).2 In contrast to the technology sector, the top internal risk globally across industries is reliability and functionality of information
systems (26%). 3 Talent is rated higher as a risk in the tech sector (29%) than globally (25%).
Region-specific findings for the technology sectorA United States – The top-rated internal risks are lack of strategic plans/execution (41%), talent (41%), and lack of regulatory controls
(41%)—the highest ratings for any internal risks in any region.B Latin America – The top-rated internal risk is liquidity and financial position (38%); the lowest-rated is lack of controls (19%).C Europe – The top-rated internal risks are talent (26%) and lack of controls (26%); the lowest-rated is liquidity and financial position at
15% (its lowest rating for any region).D Asia Pacific – The top-rated internal risk is talent (31%); the lowest-rated internal risks are liquidity and financial position (19%) and lack
of controls (19%).
Talent and lack of strategic plans are the top internal risks The top internal risks in the technology sector are recruitment, development, and retention of talent (29%) and lack of strategic plans/execution (28%). Tech companies in
the United States had particularly high ratings for those same two risks, as well as lack of controls (all at 41%) (see figure 15).
Figure 15. Top internal risks
Lack of strategic plans or execution to provide clear directionto the business
Liquidity and financial position to support business plans
Recruitment, development and retention of required talent to support business initiatives
Reliability and functionality of information systems to support business processes and decisions
Lack of controls, processesand systems to ensure business continuity
Lack of regulatory, legal and/or management controls
0
10
20
30
40
50
60
70
80
Global Technology
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts 23%25% 25%26%
24% 24%22%
28%
41%
17% 17%15%
19%
31%
26% 26%24%
31%
21%21%
23% 23%
29%
23% 23%
27% 27% 27%
23%
D
D
B
B
A41%A
A
41%A
21
1
0
10
20
30
40
50
60
70
80
28% 28%
38%
19% C
C C
19%D
% o
f tot
al r
espo
nden
ts
24 25
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 The top-rated external risks among technology sector respondents are macroeconomic concerns (72%), followed by cybersecurity
(66%) and digital disruption (66%).2 Globally, cybersecurity (62%) and digital disruption (61%) are among the three top risks as well, with macroeconomics in a three-way tie
for third at 59%.3 Overall ratings for external risks in the technology sector tend to be significantly higher than the global averages across industries.
Region-specific findings for the technology sectorA United States – The top-rated external risks are macroeconomic concerns (69%), new market entrants (69%), and digital disruption
(69%); credit risks rank last at 48%, the lowest rating among all regions.B Latin America – Currency fluctuations are the top-rated risk in Latin America at 81%, the highest rating among all regions; unlike all
other regions, macroeconomic concerns are the lowest-rated (50%).C Europe – Macroeconomic concerns are the top-rated external risk (79%); political climate is the lowest-rated (57%).D Asia Pacific – Macroeconomic concerns are the top-rated external risk (77%); currency fluctuations are the lowest-rated (at 55%).
Macroeconomic concerns are the top-rated external riskIn contrast to the global results where cybersecurity tops the list of external risks, macroeconomic concerns are the top-rated external risk (72%) for tech companies. Cybersecurity
and digital disruption are tied for second, both at 66% (see figure 14).
Figure 14. Top external risks
0
10
20
30
40
50
60
70
80
Global Technology
% o
f tot
al r
espo
nden
ts
59% 59% 58% 59% 57%62%
57%61%
64%
72%
63% 65%60%
66% 66%61%
1
2 21 1
Political climate Macroeconomic concerns Currency fluctuations Commodity price fluctuations
Credit risks Cyber security concerns New market entrants Digital disruption
0
10
20
30
40
50
60
70
80
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts
59%
69% 69% 69%69% 69%
79%
54%50%
55%
62%58% 58% 58%
70% 70%
57%
64%68%
63% 63% 61%
72%
60%
76% 77%
56%
48%
55% 55%
65%
81%
A
A
A A
B
B D
D
C
C
Survey findings1 The top internal risk for tech companies is talent (29%), followed by lack of strategic plans/execution (28%).2 In contrast to the technology sector, the top internal risk globally across industries is reliability and functionality of information
systems (26%). 3 Talent is rated higher as a risk in the tech sector (29%) than globally (25%).
Region-specific findings for the technology sectorA United States – The top-rated internal risks are lack of strategic plans/execution (41%), talent (41%), and lack of regulatory controls
(41%)—the highest ratings for any internal risks in any region.B Latin America – The top-rated internal risk is liquidity and financial position (38%); the lowest-rated is lack of controls (19%).C Europe – The top-rated internal risks are talent (26%) and lack of controls (26%); the lowest-rated is liquidity and financial position at
15% (its lowest rating for any region).D Asia Pacific – The top-rated internal risk is talent (31%); the lowest-rated internal risks are liquidity and financial position (19%) and lack
of controls (19%).
Talent and lack of strategic plans are the top internal risks The top internal risks in the technology sector are recruitment, development, and retention of talent (29%) and lack of strategic plans/execution (28%). Tech companies in
the United States had particularly high ratings for those same two risks, as well as lack of controls (all at 41%) (see figure 15).
Figure 15. Top internal risks
Lack of strategic plans or execution to provide clear directionto the business
Liquidity and financial position to support business plans
Recruitment, development and retention of required talent to support business initiatives
Reliability and functionality of information systems to support business processes and decisions
Lack of controls, processesand systems to ensure business continuity
Lack of regulatory, legal and/or management controls
0
10
20
30
40
50
60
70
80
Global Technology
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts 23%25% 25%26%
24% 24%22%
28%
41%
17% 17%15%
19%
31%
26% 26%24%
31%
21%21%
23% 23%
29%
23% 23%
27% 27% 27%
23%
D
D
B
B
A41%A
A
41%A
21
1
0
10
20
30
40
50
60
70
80
28% 28%
38%
19% C
C C
19%D
% o
f tot
al r
espo
nden
ts
24 25
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 The technology sector’s three top strategic priorities over the past 24 months were product profitability (81%), sales
growth (80%), and technology implementation (79%); those were also the three top priorities globally across industries.2 The sector’s top priorities over the next 24 months are technology implementation (82%), sales growth (80%), and product
profitability (77%); those are also the three top priorities globally.3 In the technology sector, the priority for technology implementation is expected to increase by 4% from the past 24
months to the next 24 months.
Strategic priorities align with save-to-transform — with extra emphasis on transformationThe save-to-transform cost management approach uses cost reduction to fund investments in growth and transformational digital technologies, while in turn using many of those same digital technologies to boost the efficiency and effectiveness of cost reduction programs. In the technology sector, the top-rated strategic priorities over the next 24 months are all
fairly balanced: technology implementation (82%); sales growth (80%); product profitability (77%); technology implementation (77%); organization and talent (72%); digital enablement (73%); and cost reduction (71%). This broad set of balanced priorities typifies the save-to-transform mindset (see figure 16).
Figure 16. Strategic priorities (tech sector versus global across industries)
% of total respondents
Sales growth Cost reduction Balance sheet management Product profitability
Organization and talent Technology implementation Digital enablement
Global
0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90
Next 24 monthsPast 24 months
% of total respondents
Technology
0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90
69%
61%
73%
69%
73%
69%
73%
70%
66%
81%
72%
79%
74%
80% 80%
82%
71%
69%
77%
73%
76%
68%
61%
73%
68%
73%
69%
72%
Next 24 monthsPast 24 months
1 1
1
1
1
1
3
3 3
2 2
2
2
2
2
72686173687369
+4%
Strategic priorities vary significantly by regionStrategic priorities for cost reduction vary significantly by region, with noteworthy changes over time. The priorities of APAC tech companies over the next 24 months appear to be
the most closely aligned with a save-to-transform mindset (see figure17).
Figure 17. Strategic priorities
Region-specific findings for the technology sector over the next 24 monthsA United States – The top priority is sales growth (86%); the lowest are balance
sheet management (62%) and digital enablement (62%).B Latin America – The top priority is technology implementation (88%), with a
higher rating in Latin America than in any other region; the lowest priority is cost reduction at 58%, the lowest rating among all regions.
C Europe – The top priority is sales growth (77%); the lowest is digital enablement (68%).
D Asia Pacific – The top priority is technology implementation (85%); the lowest is balance sheet management (71%).
Comparison to past 24 months
E United States – Balance sheet management as a priority increases by 13%; digital enablement increases by 6%.
F Latin America – Organization and talent increases by 18%; balance sheet management decreases by 18%.
G Europe – Sales growth as a priority increases by 16%; product profitability decreases by 18%.
H Asia Pacific – Cost reduction increases by 9%; sales growth decreases by 9%.
% of total respondents
Sales growth Cost reduction Balance sheet management Product profitability
Organization and talent Technology implementation Digital enablement
US(Tech)
Next 24 monthsPast 24 months
% of total respondents
Europe(Tech)
55%
72%
72%
76%
59%
86%
68%
64%
70%
70%
70%
85%
66%
72%
68%
74%
74%
72%
72%
72%
76%
76%
72%
62%
62%
86%
Next 24 monthsPast 24 months
+13%
LATAM(Tech)
0 10
APAC(Tech)
0 10
69%
69%85%
85%
65%
81%
73%
77%
71%
65%
79%
74%
82%
79%
89%
77%
71%
81%
76%
85%
79%
81%
58%
81%
81%
88%
77%
77%
77%
77%
-17%
-18%
E
+6%E
F
+18%F
A
A
B
B
+16%
-18%
G
G
C
C
D
D
-9%
F +9%
F
26 27
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 The technology sector’s three top strategic priorities over the past 24 months were product profitability (81%), sales
growth (80%), and technology implementation (79%); those were also the three top priorities globally across industries.2 The sector’s top priorities over the next 24 months are technology implementation (82%), sales growth (80%), and product
profitability (77%); those are also the three top priorities globally.3 In the technology sector, the priority for technology implementation is expected to increase by 4% from the past 24
months to the next 24 months.
Strategic priorities align with save-to-transform — with extra emphasis on transformationThe save-to-transform cost management approach uses cost reduction to fund investments in growth and transformational digital technologies, while in turn using many of those same digital technologies to boost the efficiency and effectiveness of cost reduction programs. In the technology sector, the top-rated strategic priorities over the next 24 months are all
fairly balanced: technology implementation (82%); sales growth (80%); product profitability (77%); technology implementation (77%); organization and talent (72%); digital enablement (73%); and cost reduction (71%). This broad set of balanced priorities typifies the save-to-transform mindset (see figure 16).
Figure 16. Strategic priorities (tech sector versus global across industries)
% of total respondents
Sales growth Cost reduction Balance sheet management Product profitability
Organization and talent Technology implementation Digital enablement
Global
0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90
Next 24 monthsPast 24 months
% of total respondents
Technology
0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90
69%
61%
73%
69%
73%
69%
73%
70%
66%
81%
72%
79%
74%
80% 80%
82%
71%
69%
77%
73%
76%
68%
61%
73%
68%
73%
69%
72%
Next 24 monthsPast 24 months
1 1
1
1
1
1
3
3 3
2 2
2
2
2
2
72686173687369
+4%
Strategic priorities vary significantly by regionStrategic priorities for cost reduction vary significantly by region, with noteworthy changes over time. The priorities of APAC tech companies over the next 24 months appear to be
the most closely aligned with a save-to-transform mindset (see figure17).
Figure 17. Strategic priorities
Region-specific findings for the technology sector over the next 24 monthsA United States – The top priority is sales growth (86%); the lowest are balance
sheet management (62%) and digital enablement (62%).B Latin America – The top priority is technology implementation (88%), with a
higher rating in Latin America than in any other region; the lowest priority is cost reduction at 58%, the lowest rating among all regions.
C Europe – The top priority is sales growth (77%); the lowest is digital enablement (68%).
D Asia Pacific – The top priority is technology implementation (85%); the lowest is balance sheet management (71%).
Comparison to past 24 months
E United States – Balance sheet management as a priority increases by 13%; digital enablement increases by 6%.
F Latin America – Organization and talent increases by 18%; balance sheet management decreases by 18%.
G Europe – Sales growth as a priority increases by 16%; product profitability decreases by 18%.
H Asia Pacific – Cost reduction increases by 9%; sales growth decreases by 9%.
% of total respondents
Sales growth Cost reduction Balance sheet management Product profitability
Organization and talent Technology implementation Digital enablement
US(Tech)
Next 24 monthsPast 24 months
% of total respondents
Europe(Tech)
55%
72%
72%
76%
59%
86%
68%
64%
70%
70%
70%
85%
66%
72%
68%
74%
74%
72%
72%
72%
76%
76%
72%
62%
62%
86%
Next 24 monthsPast 24 months
+13%
LATAM(Tech)
0 10
APAC(Tech)
0 10
69%
69%85%
85%
65%
81%
73%
77%
71%
65%
79%
74%
82%
79%
89%
77%
71%
81%
76%
85%
79%
81%
58%
81%
81%
88%
77%
77%
77%
77%
-17%
-18%
E
+6%E
F
+18%F
A
A
B
B
+16%
-18%
G
G
C
C
D
D
-9%
F +9%
F
26 27
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Competition is expected to be the top cost reduction driverOver the next 24 months, the technology sector’s three top drivers for cost reduction are intensified competition (76%), required investment in growth areas (74%), and international
growth opportunities (71%). Those results are fairly consistent with the past 24 months, except for a sharply increased focus on competition (see figure 18).
Figure 18. Cost reduction drivers
Survey findings1 The tech sector’s three top drivers over the past 24 months were investment in growth areas (70%), intensified
competition (68%), and international growth opportunities (67%); those same three drivers topped the list globally across all industries.
2 The tech sector’s three top drivers over the next 24 months remain the same, except that intensified competition tops the list at 76%, followed by investment in growth areas at 74%, and international growth opportunities at 71%.
3 Looking ahead, tech companies expect competition to rise sharply as a cost driver (+12%).
% of total respondents
Global
Next 24 monthsPast 24 months
% of total respondents
Technology52%
56%
59%
66%
65%
63%
52%
63%
63%
70%
64%
60%
60%
60%
62%
69%
68%
74%
76%
71%67%
53%
57%
61%
67%
66%
65%
55%
Next 24 monthsPast 24 months
Significant reduction in consumer demandDecrease in liquidity and tighter creditUnfavorable cost position relative to peer group
Changed regulatory structureRequired investment in growth areasIntensified competition among peer group
Increased international growth opportunities
1
1
1
2
2
22
2
2
1
1
1
+12%3
Cost reduction drivers vary widely by regionIn the technology sector, cost reduction drivers vary widely by region and are expected to evolve significantly over the
next 24 months, particularly in the United States and Europe (see figure 19).
Figure 19. Cost reduction drivers by region
Region-specific findings for the technology sector over the next 24 monthsA United States – The top-rated cost reduction drivers are
investment in growth areas (72%) and intensified competition (72%); the lowest-rated is decrease in liquidity (48%).
B Latin America – The top-rated driver is intensified competition at 81%, the highest rating for any driver in any region; at the other extreme, the lowest-rated is decrease in liquidity at 46%, the lowest rating for any driver in any region.
C Europe – The top-rated driver is decrease in liquidity (77%); the lowest is unfavorable cost position (60%).
D Asia Pacific – The top-rated drivers are intensified competition (77%) and international growth opportunities (77%); the lowest is unfavorable cost position (58%).
Comparison to past 24 months
E United States – The focus on reduced consumer demand is expected to rise by 29%.
F Latin America – All cost reduction drivers are expected to increase over the next 24 months (+32%, on average) except decrease in liquidity (-8%).
G Europe – Greater focus is expected on decreased liquidity (+ 29%) and intensified competition (+21%).
H Asia Pacific – Unfavorable cost position is expected to be less of a focus (-16%).
% of total respondents
Next 24 monthsPast 24 months
% of total respondents
55%
62%
62%
62%
62% 62%
76%
83%
69%
59%
48%
62%
62%
57%
64% 64%
64%
60%
60%
69%
74%
74%
77%
72%
72%
68%
68%
68%
52%Next 24 monthsPast 24 months
+29%
+29%
0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90
50%
58%
58%
50%
46%
46%
48%
62%
62%
68%
66%
73%
74%
61%
58%
69%
74%
77%
77%
73%
73%
73%
81%
65% 61%
Significant reduction in consumer demandDecrease in liquidity and tighter creditUnfavorable cost position relative to peer group
Changed regulatory structureRequired investment in growth areasIntensified competition among peer group
Increased international growth opportunities
+31%+31%
+31%
+19%
-16%
E
A
A
A
G
+21%+19%
G
H
C
C
D
D
D
B
B
69% 69%
+75%
77%
63%
US(Tech)
Europe(Tech)
LATAM(Tech)
APAC(Tech)
28 29
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Competition is expected to be the top cost reduction driverOver the next 24 months, the technology sector’s three top drivers for cost reduction are intensified competition (76%), required investment in growth areas (74%), and international
growth opportunities (71%). Those results are fairly consistent with the past 24 months, except for a sharply increased focus on competition (see figure 18).
Figure 18. Cost reduction drivers
Survey findings1 The tech sector’s three top drivers over the past 24 months were investment in growth areas (70%), intensified
competition (68%), and international growth opportunities (67%); those same three drivers topped the list globally across all industries.
2 The tech sector’s three top drivers over the next 24 months remain the same, except that intensified competition tops the list at 76%, followed by investment in growth areas at 74%, and international growth opportunities at 71%.
3 Looking ahead, tech companies expect competition to rise sharply as a cost driver (+12%).
% of total respondents
Global
Next 24 monthsPast 24 months
% of total respondents
Technology52%
56%
59%
66%
65%
63%
52%
63%
63%
70%
64%
60%
60%
60%
62%
69%
68%
74%
76%
71%67%
53%
57%
61%
67%
66%
65%
55%
Next 24 monthsPast 24 months
Significant reduction in consumer demandDecrease in liquidity and tighter creditUnfavorable cost position relative to peer group
Changed regulatory structureRequired investment in growth areasIntensified competition among peer group
Increased international growth opportunities
1
1
1
2
2
22
2
2
1
1
1
+12%3
Cost reduction drivers vary widely by regionIn the technology sector, cost reduction drivers vary widely by region and are expected to evolve significantly over the
next 24 months, particularly in the United States and Europe (see figure 19).
Figure 19. Cost reduction drivers by region
Region-specific findings for the technology sector over the next 24 monthsA United States – The top-rated cost reduction drivers are
investment in growth areas (72%) and intensified competition (72%); the lowest-rated is decrease in liquidity (48%).
B Latin America – The top-rated driver is intensified competition at 81%, the highest rating for any driver in any region; at the other extreme, the lowest-rated is decrease in liquidity at 46%, the lowest rating for any driver in any region.
C Europe – The top-rated driver is decrease in liquidity (77%); the lowest is unfavorable cost position (60%).
D Asia Pacific – The top-rated drivers are intensified competition (77%) and international growth opportunities (77%); the lowest is unfavorable cost position (58%).
Comparison to past 24 months
E United States – The focus on reduced consumer demand is expected to rise by 29%.
F Latin America – All cost reduction drivers are expected to increase over the next 24 months (+32%, on average) except decrease in liquidity (-8%).
G Europe – Greater focus is expected on decreased liquidity (+ 29%) and intensified competition (+21%).
H Asia Pacific – Unfavorable cost position is expected to be less of a focus (-16%).
% of total respondents
Next 24 monthsPast 24 months
% of total respondents
55%
62%
62%
62%
62% 62%
76%
83%
69%
59%
48%
62%
62%
57%
64% 64%
64%
60%
60%
69%
74%
74%
77%
72%
72%
68%
68%
68%
52%Next 24 monthsPast 24 months
+29%
+29%
0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90
50%
58%
58%
50%
46%
46%
48%
62%
62%
68%
66%
73%
74%
61%
58%
69%
74%
77%
77%
73%
73%
73%
81%
65% 61%
Significant reduction in consumer demandDecrease in liquidity and tighter creditUnfavorable cost position relative to peer group
Changed regulatory structureRequired investment in growth areasIntensified competition among peer group
Increased international growth opportunities
+31%+31%
+31%
+19%
-16%
E
A
A
A
G
+21%+19%
G
H
C
C
D
D
D
B
B
69% 69%
+75%
77%
63%
US(Tech)
Europe(Tech)
LATAM(Tech)
APAC(Tech)
28 29
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Capability development in the tech sector resembles the global resultsCapability development in the technology sector resembles the global pattern across all industries. The biggest difference is that
tech companies have a significantly greater focus on automation (54% versus 48% across industries) (see figure 20).
Figure 20. Capabilities developed over the past 24 months
Survey findings1 The technology sector’s most commonly developed capabilities were automation (54%) and cognitive solutions (43%).2 Similarly, automation was the most commonly developed capability globally (48%).3 Zero-based budgeting (ZBB) was the least commonly developed capability in the tech sector (12%), matching the global average
(12%).
Region-specific findings for the technology sectorA United States – The most commonly developed capability over the past 24 months was automation (55%); the least common
was ZBB (17%).B Latin America – The most commonly developed capability was automation (46%); the least common were improved processes
for forecasting, budgeting, and reporting (23%) and ZBB (23%, which was by far the highest frequency of ZBB development in any region).
C Europe – The most commonly developed capability was automation at 62% (the highest rating for any capability in any region); the least common was ZBB at 9% (the lowest rating for any capability in any region).
D APAC – The most commonly developed capability was creating a new executive position (55%); the least common was ZBB (10%).
Created a new executive position and/orfull time positions to drive cost managementt
Set-up or improved ERP infrastructure
Implemented new policies and procedures, and strengthened thecompliance mechanisms
Improved processes for forecasting, budgetingand reporting to enable effective cost management
0
10
20
30
40
50
60
70
80
Global Technology
% o
f tot
al r
espo
nden
ts
34%
41%
48%
42% 41%
12%
42%37%
54%
Developed or implemented Automation technologies
Developed or implemented Cognitive and Artificial Intelligence technologies
1
1
3 3
34%
22
Implemented zero-based budgeting system or process
43%
36%
30%
12%
0
10
20
30
40
50
60
70
80
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts
34%
46%42%
55%
31%
23% 23%
30%
38%
48% 47%
37%
62%
55%
31%31% 31%
A
A
B
B
D
C
41%
52%48%
17%
34%B
45%
D
38%38%
15%
9% 10%
Tech companies have favored tactical cost actionsAccording to the survey results, technology companies tended to favor tactical cost actions over strategic cost actions during the past 24 months. This resembles the global pattern across industries, but is even more pronounced (see figure 21).
Tactical actions tend to produce incremental improvements and relatively small cost savings, whereas strategic actions have a much broader and deeper impact. Examples of strategic actions include: centralizing business activities (action 1 in the chart); structurally reconfiguring the business (action 2); and outsourcing/offshoring (action 3).
Figure 21. Implemented cost reduction actions over the past 24 months
Survey findingss1 The tech sector’s most commonly implemented cost reduction actions over the past 24 months were streamlined business processes
(43%), improved policy compliance (42%), and streamlined organization structure (41%).
2 Similar to tech sector, the most commonly implemented cost actions globally were streamlined business processes (37%), improved policy compliance (37%), and streamlined organization structure (36%).
3 Tech companies have focused more on tactical cost actions (39%) than strategic cost actions (35%).
Region-specific findingsA United States – The most commonly implemented cost action was streamlined organization structure at 59% (the highest rating for
any cost action in any region); the least commonly implemented was aligned incentives of executives (34%).B Latin America – The most common cost actions were changed business configuration (46%) and streamlined business processes
(46%); the least common was reduced external spend (23%).C Europe – The most common cost action was reduced external spend (45%); the least common were outsourced business processes
(26%) and aligned incentives of executives (26%).D Asia Pacific – The most common cost actions were streamlined business processes (40%) and improved policy compliance (40%); the
least common was changed business configuration at 19% (the lowest rating for any cost action in any region).
Action 1 Increased centralization - Integrated business units and functions into the corporate center
StrategicAction 2 Changed business configuration - Divested underperforming assets, adjusted number of products/services, geographies, customers, etc.
Action 3 Outsourced/Off-shored business processes to low cost service providers
Action 4 Streamlined organization structure - Increased spans of control, and modified reporting relationships
Tactical
Action 5 Streamlined business processes
Action 6 Improved policy compliance
Action 7 Reduced external spend by leveraging scale to source purchased materials/services and reduced demand for materials and services
Action 8 Implementation of specific automation or cognitive technologies
Action 9 Aligned incentives of executives or employees to cost reduction objectives
Averages
Global US (Tech)Technology LATAM (Tech) Europe (Tech) APAC (Tech)
32% 34% 39% 50% 33% 37% 37%35% 50% 37% 31% 28%
% o
f tot
al r
espo
nden
ts
35%
31% 31
%36
% 37%
37%
32%32
%
30%
37%
34% 34
%41
% 43%
42% 38
%36
% 32%
55%
41% 55
%59
% 55%
55% 52
%45
% 34%
35%
46% 31
%35
% 46%
31% 23
%27
% 35%
30%
38% 26
%38
% 36%
40% 45
%34
% 26%
34%
19% 31
%37
% 40%
40% 32
%37
% 34%
3 3
22
21
11
A
A
B
BB
C
C
C
D
D
D
30 31
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Capability development in the tech sector resembles the global resultsCapability development in the technology sector resembles the global pattern across all industries. The biggest difference is that
tech companies have a significantly greater focus on automation (54% versus 48% across industries) (see figure 20).
Figure 20. Capabilities developed over the past 24 months
Survey findings1 The technology sector’s most commonly developed capabilities were automation (54%) and cognitive solutions (43%).2 Similarly, automation was the most commonly developed capability globally (48%).3 Zero-based budgeting (ZBB) was the least commonly developed capability in the tech sector (12%), matching the global average
(12%).
Region-specific findings for the technology sectorA United States – The most commonly developed capability over the past 24 months was automation (55%); the least common
was ZBB (17%).B Latin America – The most commonly developed capability was automation (46%); the least common were improved processes
for forecasting, budgeting, and reporting (23%) and ZBB (23%, which was by far the highest frequency of ZBB development in any region).
C Europe – The most commonly developed capability was automation at 62% (the highest rating for any capability in any region); the least common was ZBB at 9% (the lowest rating for any capability in any region).
D APAC – The most commonly developed capability was creating a new executive position (55%); the least common was ZBB (10%).
Created a new executive position and/orfull time positions to drive cost managementt
Set-up or improved ERP infrastructure
Implemented new policies and procedures, and strengthened thecompliance mechanisms
Improved processes for forecasting, budgetingand reporting to enable effective cost management
0
10
20
30
40
50
60
70
80
Global Technology
% o
f tot
al r
espo
nden
ts
34%
41%
48%
42% 41%
12%
42%37%
54%
Developed or implemented Automation technologies
Developed or implemented Cognitive and Artificial Intelligence technologies
1
1
3 3
34%
22
Implemented zero-based budgeting system or process
43%
36%
30%
12%
0
10
20
30
40
50
60
70
80
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts
34%
46%42%
55%
31%
23% 23%
30%
38%
48% 47%
37%
62%
55%
31%31% 31%
A
A
B
B
D
C
41%
52%48%
17%
34%B
45%
D
38%38%
15%
9% 10%
Tech companies have favored tactical cost actionsAccording to the survey results, technology companies tended to favor tactical cost actions over strategic cost actions during the past 24 months. This resembles the global pattern across industries, but is even more pronounced (see figure 21).
Tactical actions tend to produce incremental improvements and relatively small cost savings, whereas strategic actions have a much broader and deeper impact. Examples of strategic actions include: centralizing business activities (action 1 in the chart); structurally reconfiguring the business (action 2); and outsourcing/offshoring (action 3).
Figure 21. Implemented cost reduction actions over the past 24 months
Survey findingss1 The tech sector’s most commonly implemented cost reduction actions over the past 24 months were streamlined business processes
(43%), improved policy compliance (42%), and streamlined organization structure (41%).
2 Similar to tech sector, the most commonly implemented cost actions globally were streamlined business processes (37%), improved policy compliance (37%), and streamlined organization structure (36%).
3 Tech companies have focused more on tactical cost actions (39%) than strategic cost actions (35%).
Region-specific findingsA United States – The most commonly implemented cost action was streamlined organization structure at 59% (the highest rating for
any cost action in any region); the least commonly implemented was aligned incentives of executives (34%).B Latin America – The most common cost actions were changed business configuration (46%) and streamlined business processes
(46%); the least common was reduced external spend (23%).C Europe – The most common cost action was reduced external spend (45%); the least common were outsourced business processes
(26%) and aligned incentives of executives (26%).D Asia Pacific – The most common cost actions were streamlined business processes (40%) and improved policy compliance (40%); the
least common was changed business configuration at 19% (the lowest rating for any cost action in any region).
Action 1 Increased centralization - Integrated business units and functions into the corporate center
StrategicAction 2 Changed business configuration - Divested underperforming assets, adjusted number of products/services, geographies, customers, etc.
Action 3 Outsourced/Off-shored business processes to low cost service providers
Action 4 Streamlined organization structure - Increased spans of control, and modified reporting relationships
Tactical
Action 5 Streamlined business processes
Action 6 Improved policy compliance
Action 7 Reduced external spend by leveraging scale to source purchased materials/services and reduced demand for materials and services
Action 8 Implementation of specific automation or cognitive technologies
Action 9 Aligned incentives of executives or employees to cost reduction objectives
Averages
Global US (Tech)Technology LATAM (Tech) Europe (Tech) APAC (Tech)
32% 34% 39% 50% 33% 37% 37%35% 50% 37% 31% 28%
% o
f tot
al r
espo
nden
ts
35%
31% 31
%36
% 37%
37%
32%32
%
30%
37%
34% 34
%41
% 43%
42% 38
%36
% 32%
55%
41% 55
%59
% 55%
55% 52
%45
% 34%
35%
46% 31
%35
% 46%
31% 23
%27
% 35%
30%
38% 26
%38
% 36%
40% 45
%34
% 26%
34%
19% 31
%37
% 40%
40% 32
%37
% 34%
3 3
22
21
11
A
A
B
BB
C
C
C
D
D
D
30 31
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
StrategicIn process of implementationNot implemented but planned
Averages
Global(Tech) US (Tech)Technology(Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
35%
62% 61% 58% 50% 62% 61% 57%62% 45% 64% 65% 68%
% o
f tot
al r
espo
nden
ts
42%
44%
43%
42%
46%
40%
43%
41%
19% 21
%16
%18
% 16%
19% 18
%22
%
49%
47%
47%
47%
39%
45%
45%
14%
14% 14
%17%
17%
17%
17%
17%
11%
9% 16%
18%
31%
38%
31%
40%
41%
45%
28%
31%
45%
10%
10%
7%
3%
50%
51%
42%
35%
42%
50%
50%
31%
15%
15%
15%
19%
31%
12%
19%
19% 19
%
27%
54%
43%
53%
38%
43%
47%
47%
51%
21%
21%
13%
15% 15
%
15%
13%
13%
13%
19% 17
%
40%
45%
40%
55%
45%
40%
35%
60%
6%10%
3%
1 1 1
A
A2
B
B
CC
D
D
3
Strategic cost actions will be favored in the futureLooking ahead to the next 24 months, tech companies expect to favor strategic cost reduction actions (62%) over tactical cost actions (58%). The notable exception is the United States, where the data shows tech companies shifting from a balanced approach over the past 24 months (50%
average rating for strategic cost actions, 50% average rating for tactical cost actions – see figure 21) to a bias for tactical cost actions (45% average rating for strategic cost actions versus a 50% average rating for tactical cost actions) (see figure 22).
Figure 22. Expected cost reduction actions over the next 24 months
Survey findings1 The tech sector’s most expected cost reduction actions over the next 24 months are change business configuration (64%
in-process or planned), increase centralization (63%), and implement technology (63%).2 Globally across industries, change business configuration is also the most expected cost action (65%).3 Tech sector respondents expect an increased focus on strategic cost actions (62%) versus tactical cost actions (58%) over
the next 24 months.
Region-specific findingsA United States – The most expected cost action over the next 24 months is implement technology (59%); the least
expected cost action is outsource business processes (38%, the lowest rating for any cost action in any region).B Latin America – The most expected cost action is reduce external spend (69%); the least expected is streamline business
processes (64%).C Europe – The most expected cost action is outsource business processes (66%); the least expected is streamline business
processes (58%)D Asia Pacific – The most expected cost action is increase centralization (74%, the highest rating for any cost action in any
region); the least expected is streamline organization structure (45%).
Action 1 Increase centralization - Integrated business units and functions into the corporate center
StrategicAction 2 Change business configuration - Divested underperforming assets, adjusted number of products/services, geographies, customers, etc.
Action 3 Outsource/Off-shore business processes to low cost service providers
Action 4 Streamline organization structure - Increased spans of control, and modified reporting relationships
Tactical
Action 5 Streamline business processes
Action 6 Improve policy compliance
Action 7 Reduce external spend by leveraging scale to source purchased materials/services and reduced demand for materials and services
Action 8 Implementation of specific automation or cognitive technologies
Erosion of savings is the top barrier to cost reductionIn the technology sector, the three top barriers to successful cost reduction are erosion of savings (71%), implementation challenges (68%), and lack of an effective ERP system (67%).
Those same barriers top the list globally across industries, except that erosion of savings only ranks third (see figure 23).
Figure 23. Barriers to successful cost reduction
Survey findings1 The tech sector’s three top barriers to successful cost reduction are erosion of savings (71%), implementation challenges (68%), and
lack of an effective ERP system (67%).2 The three top barriers globally across industries are implementation challenges (65%), lack of an effective ERP system (62%), and
erosion of savings (61%).3 Implementation challenges are the number one barrier globally but only number two in the technology sector; however, the tech
sector’s rating for implementation challenges (68%) is actually higher than the global rating (65%).
Region-specific findingsA United States – All barriers have equal ratings (62%), except for weak/unclear business case (55%, the lowest rating for any barrier in
any region).B Latin America – The top-rated barrier is erosion of savings (85%, the highest rating for any barrier in any region); the lowest-rated are
weak/unclear business case (65%) and lack of an effective ERP system (65%).C Europe – The top-rated barriers are erosion of savings (72%) and lack of an effective ERP systems (72%); the lowest-rated are weak/
unclear business case (57%) and poorly designed reporting (57%).D Asia Pacific – Similar to the global results, the top-rated barrier is implementation challenges (73%), while the lowest-rated barriers
are lack of solution understanding (66%) and lack of an effective ERP system (66%).
Lack of understanding/ acceptance of the solution by the audience
Erosion of savings due to infeasible target setting
Weak/ unclear business case for cost improvement
Poorly designed reporting and tracking
Lack of an effective ERP system to enable data availability, decision-making, process improvement, performance management
Management challenges in implementing initiatives
0
10
20
30
40
50
60
70
80
Global Technology
% o
f tot
al r
espo
nden
ts
57% 58% 61% 62% 65%62% 64% 66%
71%67% 68%
57%
1
1 12
2 23
3
0
10
20
30
40
50
60
70
80
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts
55%
85%
73%69%65%
57%
73%65%
72%72%
62% 62%68%68% 66%66%
71% 73%
62% 62%62%62%62%A
A B
B
BCC
C57%
C
DDD
32 33
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
StrategicIn process of implementationNot implemented but planned
Averages
Global(Tech) US (Tech)Technology(Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
35%
62% 61% 58% 50% 62% 61% 57%62% 45% 64% 65% 68%
% o
f tot
al r
espo
nden
ts
42%
44%
43%
42%
46%
40%
43%
41%
19% 21
%16
%18
% 16%
19% 18
%22
%
49%
47%
47%
47%
39%
45%
45%
14%
14% 14
%17%
17%
17%
17%
17%
11%
9% 16%
18%
31%
38%
31%
40%
41%
45%
28%
31%
45%
10%
10%
7%
3%
50%
51%
42%
35%
42%
50%
50%
31%
15%
15%
15%
19%
31%
12%
19%
19% 19
%
27%
54%
43%
53%
38%
43%
47%
47%
51%
21%
21%
13%
15% 15
%
15%
13%
13%
13%
19% 17
%
40%
45%
40%
55%
45%
40%
35%
60%
6%10%
3%
1 1 1
A
A2
B
B
CC
D
D
3
Strategic cost actions will be favored in the futureLooking ahead to the next 24 months, tech companies expect to favor strategic cost reduction actions (62%) over tactical cost actions (58%). The notable exception is the United States, where the data shows tech companies shifting from a balanced approach over the past 24 months (50%
average rating for strategic cost actions, 50% average rating for tactical cost actions – see figure 21) to a bias for tactical cost actions (45% average rating for strategic cost actions versus a 50% average rating for tactical cost actions) (see figure 22).
Figure 22. Expected cost reduction actions over the next 24 months
Survey findings1 The tech sector’s most expected cost reduction actions over the next 24 months are change business configuration (64%
in-process or planned), increase centralization (63%), and implement technology (63%).2 Globally across industries, change business configuration is also the most expected cost action (65%).3 Tech sector respondents expect an increased focus on strategic cost actions (62%) versus tactical cost actions (58%) over
the next 24 months.
Region-specific findingsA United States – The most expected cost action over the next 24 months is implement technology (59%); the least
expected cost action is outsource business processes (38%, the lowest rating for any cost action in any region).B Latin America – The most expected cost action is reduce external spend (69%); the least expected is streamline business
processes (64%).C Europe – The most expected cost action is outsource business processes (66%); the least expected is streamline business
processes (58%)D Asia Pacific – The most expected cost action is increase centralization (74%, the highest rating for any cost action in any
region); the least expected is streamline organization structure (45%).
Action 1 Increase centralization - Integrated business units and functions into the corporate center
StrategicAction 2 Change business configuration - Divested underperforming assets, adjusted number of products/services, geographies, customers, etc.
Action 3 Outsource/Off-shore business processes to low cost service providers
Action 4 Streamline organization structure - Increased spans of control, and modified reporting relationships
Tactical
Action 5 Streamline business processes
Action 6 Improve policy compliance
Action 7 Reduce external spend by leveraging scale to source purchased materials/services and reduced demand for materials and services
Action 8 Implementation of specific automation or cognitive technologies
Erosion of savings is the top barrier to cost reductionIn the technology sector, the three top barriers to successful cost reduction are erosion of savings (71%), implementation challenges (68%), and lack of an effective ERP system (67%).
Those same barriers top the list globally across industries, except that erosion of savings only ranks third (see figure 23).
Figure 23. Barriers to successful cost reduction
Survey findings1 The tech sector’s three top barriers to successful cost reduction are erosion of savings (71%), implementation challenges (68%), and
lack of an effective ERP system (67%).2 The three top barriers globally across industries are implementation challenges (65%), lack of an effective ERP system (62%), and
erosion of savings (61%).3 Implementation challenges are the number one barrier globally but only number two in the technology sector; however, the tech
sector’s rating for implementation challenges (68%) is actually higher than the global rating (65%).
Region-specific findingsA United States – All barriers have equal ratings (62%), except for weak/unclear business case (55%, the lowest rating for any barrier in
any region).B Latin America – The top-rated barrier is erosion of savings (85%, the highest rating for any barrier in any region); the lowest-rated are
weak/unclear business case (65%) and lack of an effective ERP system (65%).C Europe – The top-rated barriers are erosion of savings (72%) and lack of an effective ERP systems (72%); the lowest-rated are weak/
unclear business case (57%) and poorly designed reporting (57%).D Asia Pacific – Similar to the global results, the top-rated barrier is implementation challenges (73%), while the lowest-rated barriers
are lack of solution understanding (66%) and lack of an effective ERP system (66%).
Lack of understanding/ acceptance of the solution by the audience
Erosion of savings due to infeasible target setting
Weak/ unclear business case for cost improvement
Poorly designed reporting and tracking
Lack of an effective ERP system to enable data availability, decision-making, process improvement, performance management
Management challenges in implementing initiatives
0
10
20
30
40
50
60
70
80
Global Technology
% o
f tot
al r
espo
nden
ts
57% 58% 61% 62% 65%62% 64% 66%
71%67% 68%
57%
1
1 12
2 23
3
0
10
20
30
40
50
60
70
80
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts
55%
85%
73%69%65%
57%
73%65%
72%72%
62% 62%68%68% 66%66%
71% 73%
62% 62%62%62%62%A
A B
B
BCC
C57%
C
DDD
32 33
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Lessons learnedThe top lessons learned in the technology sector are: design a solid tracking and reporting process (76%); assess, validate, and adjust targets reasonably to reflect reality throughout the implementation phase (76%); and invest in technology
improvements to enable data availability, reliability, and decision-making processes (75%). Those same three lessons top the list globally across industries, although their relative rankings are different (see figure 24).
Figure 24. Lessons learned for effective cost management
Survey findings1 The tech sector’s three top lessons learned are: design a solid tracking/reporting process (76%); adjust targets to reflect reality (76%);
and invest in technology improvements (75%).2 The three top lessons globally are: invest in technology improvements (72%); design a solid tracking/reporting process (70%); and
adjust targets to reflect reality (69%).3 Tech sector respondents rate all lessons significantly higher than the global averages.
Region-specific findingsA United States – The top-rated lessons learned are to deploy change management (83%) and design a solid tracking/reporting process
(83%); the lowest-rated are to designate a full-time position for cost improvement (69%) and adjust targets to reflect reality (69%).B Latin America –The top-rated lesson is to adjust targets to reflect reality (88%, the highest rating for any lesson in any region); the
lowest-rated are to designate a full-time position for cost improvement (69%), establish a clear business case (69%), and deploy change management (69%).
C Europe – The top-rated lesson is to design a solid tracking/reporting process (77%); the lowest-rated is to designate a full-time position for cost improvement (64%, the lowest rating for any lesson in any region).
D Asia Pacific – The top-rated lesson is to adjust targets to reflect reality (82%); the lowest-rated is to designate a full-time position for cost improvement (69%).
0
10
20
30
40
50
60
70
80
Global Technology
% o
f tot
al r
espo
nden
ts 65% 66%70% 69% 72% 73%
67%72%
61%
21 1 1
2 2
0
10
20
30
40
50
60
70
80
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts
83%
73%
88%
73%77%
64% 66% 66%72% 72% 69%
73%77% 74%
82% 79%72%69% 69% 69% 69%69%
A
A83%A
A
B
B B BC
C
D
D
76%76% 75%
76%
Designate a full-time position to drive efficiency and cost improvement initiatives
Design a solid tracking and reporting process
Develop, validate and sponsor a clear business case for cost improvement
Deploy change management activities to raise awareness, acceptance, and benefits of initiatives
Assess, validate, and adjust targets reasonably according to the reality throughout the implementation phase
Invest in technology improvements to enable data availablity, reliability, adn decision-making process
Tech companies report a high level of cost management maturity Overall cost management maturity levels in the technology sector are significantly higher than the global averages across industries. In particular, the percentage of tech companies that rate themselves high maturity (43%) is well above the global average (35%). However, maturity ratings vary widely
by region. For example, only 23% of LATAM tech companies consider themselves high maturity, far lower than the 59% of US tech companies that rate themselves at that highest level (see figure 25).
Figure 25. Cost management maturity levels
Survey findings1 In the technology sector across all regions, 43% of companies rate themselves high maturity at cost management, and 29% rate
themselves intermediate maturity.2 Globally, 35% of companies across all industries rate themselves high maturity and 31% rate themselves intermediate maturity.3 Only 12% of technology sector respondents rate themselves at the lowest levels of maturity, compared to 15% globally across
industries.
Region-specific findingsA United States – 59% of US tech companies rate themselves high maturity at cost management, the highest maturity rating of any
region and significantly higher than the overall averages for technology (43%) and globally across industries (35%); only 10% of US tech sector respondents rate themselves at the lowest level of maturity.
B Latin America –Latin America has the lowest percentage of tech companies that rate themselves high maturity (23%), and the highest proportion of tech companies that rate themselves at the lowest level of maturity (31%).
C Europe – 32% of European tech companies rate themselves high maturity; only 9% rate themselves lowest maturity.D Asia Pacific – 53% of APAC tech companies rate themselves high maturity at cost management; only 6% rate themselves at the lowest
level of maturity (a smaller percentage of lowest maturity companies than any other region).
% o
f tot
al r
espo
nden
ts
Lowest High
High
Intermediate
Low
Lowest
Cost policies and procedures are continually reviewed and examined to ensure best practices around efficiency and cost management
Relevant cost policies and procedures are typically well known, and personnel are trained and generally comply
There may be written cost policies and procedures documented but not readily available and essentially not followed
Few or no formal cost policies or procedures are employed or documented, or they are significantly fragmented
15% 20% 31% 35%
12% 16% 29%
10% 14% 17%
6% 16% 24%
9% 28% 32%
31% 46%
43%
59%
53%
32%
23%
Europe(Tech)
USA(Tech)
LATAM(Tech)
APAC(Tech)
Global
Technology1 1
2 2
3
3
AA
BB
CC
DD
34 35
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Lessons learnedThe top lessons learned in the technology sector are: design a solid tracking and reporting process (76%); assess, validate, and adjust targets reasonably to reflect reality throughout the implementation phase (76%); and invest in technology
improvements to enable data availability, reliability, and decision-making processes (75%). Those same three lessons top the list globally across industries, although their relative rankings are different (see figure 24).
Figure 24. Lessons learned for effective cost management
Survey findings1 The tech sector’s three top lessons learned are: design a solid tracking/reporting process (76%); adjust targets to reflect reality (76%);
and invest in technology improvements (75%).2 The three top lessons globally are: invest in technology improvements (72%); design a solid tracking/reporting process (70%); and
adjust targets to reflect reality (69%).3 Tech sector respondents rate all lessons significantly higher than the global averages.
Region-specific findingsA United States – The top-rated lessons learned are to deploy change management (83%) and design a solid tracking/reporting process
(83%); the lowest-rated are to designate a full-time position for cost improvement (69%) and adjust targets to reflect reality (69%).B Latin America –The top-rated lesson is to adjust targets to reflect reality (88%, the highest rating for any lesson in any region); the
lowest-rated are to designate a full-time position for cost improvement (69%), establish a clear business case (69%), and deploy change management (69%).
C Europe – The top-rated lesson is to design a solid tracking/reporting process (77%); the lowest-rated is to designate a full-time position for cost improvement (64%, the lowest rating for any lesson in any region).
D Asia Pacific – The top-rated lesson is to adjust targets to reflect reality (82%); the lowest-rated is to designate a full-time position for cost improvement (69%).
0
10
20
30
40
50
60
70
80
Global Technology
% o
f tot
al r
espo
nden
ts 65% 66%70% 69% 72% 73%
67%72%
61%
21 1 1
2 2
0
10
20
30
40
50
60
70
80
US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)
% o
f tot
al r
espo
nden
ts
83%
73%
88%
73%77%
64% 66% 66%72% 72% 69%
73%77% 74%
82% 79%72%69% 69% 69% 69%69%
A
A83%A
A
B
B B BC
C
D
D
76%76% 75%
76%
Designate a full-time position to drive efficiency and cost improvement initiatives
Design a solid tracking and reporting process
Develop, validate and sponsor a clear business case for cost improvement
Deploy change management activities to raise awareness, acceptance, and benefits of initiatives
Assess, validate, and adjust targets reasonably according to the reality throughout the implementation phase
Invest in technology improvements to enable data availablity, reliability, adn decision-making process
Tech companies report a high level of cost management maturity Overall cost management maturity levels in the technology sector are significantly higher than the global averages across industries. In particular, the percentage of tech companies that rate themselves high maturity (43%) is well above the global average (35%). However, maturity ratings vary widely
by region. For example, only 23% of LATAM tech companies consider themselves high maturity, far lower than the 59% of US tech companies that rate themselves at that highest level (see figure 25).
Figure 25. Cost management maturity levels
Survey findings1 In the technology sector across all regions, 43% of companies rate themselves high maturity at cost management, and 29% rate
themselves intermediate maturity.2 Globally, 35% of companies across all industries rate themselves high maturity and 31% rate themselves intermediate maturity.3 Only 12% of technology sector respondents rate themselves at the lowest levels of maturity, compared to 15% globally across
industries.
Region-specific findingsA United States – 59% of US tech companies rate themselves high maturity at cost management, the highest maturity rating of any
region and significantly higher than the overall averages for technology (43%) and globally across industries (35%); only 10% of US tech sector respondents rate themselves at the lowest level of maturity.
B Latin America –Latin America has the lowest percentage of tech companies that rate themselves high maturity (23%), and the highest proportion of tech companies that rate themselves at the lowest level of maturity (31%).
C Europe – 32% of European tech companies rate themselves high maturity; only 9% rate themselves lowest maturity.D Asia Pacific – 53% of APAC tech companies rate themselves high maturity at cost management; only 6% rate themselves at the lowest
level of maturity (a smaller percentage of lowest maturity companies than any other region).
% o
f tot
al r
espo
nden
ts
Lowest High
High
Intermediate
Low
Lowest
Cost policies and procedures are continually reviewed and examined to ensure best practices around efficiency and cost management
Relevant cost policies and procedures are typically well known, and personnel are trained and generally comply
There may be written cost policies and procedures documented but not readily available and essentially not followed
Few or no formal cost policies or procedures are employed or documented, or they are significantly fragmented
15% 20% 31% 35%
12% 16% 29%
10% 14% 17%
6% 16% 24%
9% 28% 32%
31% 46%
43%
59%
53%
32%
23%
Europe(Tech)
USA(Tech)
LATAM(Tech)
APAC(Tech)
Global
Technology1 1
2 2
3
3
AA
BB
CC
DD
34 35
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Digital technologies are having a major impact on all aspects of business in the technology sector—including cost management. Breakthrough innovations made possible by digital technology are enabling companies to operate and compete more effectively in an increasingly digital world. They also have the potential to enable new levels of cost savings
Digital and technology solutions applied to cost management in the technology sector
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in Technology
Survey findings1 In the tech sector, cloud was the most widely implemented technology covered by the survey (51%); automation was the
least widely implemented (30%).2 Cloud was also the most widely implemented globally across industries (49%), followed by business intelligence (35%).3 Implementation levels in the tech sector were consistently higher than the global averages for all technologies.
Region-specific findingsA United States – Cloud was the most widely implemented technology (66%); cognitive was the least (34%).B Latin America – Cloud was the most widely implemented technology (50%); automation was the least (19%, lowest of any
technology in any region)C Europe – Cloud was the most widely implemented technology (51%); automation was the least (26%).D Asia Pacific – Unlike all other regions, business intelligence was the most implemented technology in Asia Pacific (50%);
automation was the least (29%).
Cloud leads the packAmong the technologies covered by the survey, the most widely implemented in the tech sector over the past 24 months was cloud (51%), followed by business intelligence (44%) and cognitive (36%). Cloud was also the most widely implemented technology globally across industries
(49%). However, implementation levels varied widely by technology and region. For example, the US level of cloud implementation was 66%, by far the highest level for any of the surveyed technologies in any region (see figure 26).
Figure 26. Technology implementation levels (past 24 months)
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)0
10
20
30
40
50
60
70
% o
f tot
al r
espo
nden
ts
Automation: Robotics Process Automation
Cognitive technologies: Artificial intelligence and machine learning
Business Intelligence (Not including Cognitive or AI)
Cloud Solutions
25% 25%
35% 35%30%
36%
19%
50% 50%51%
40%
31%
48%
44% 44%
51%
31%
45%
66%
26%29%
43%
2
2
49%
34%
1
1
3 3
A
A
B
B C
C
D
D
3736
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Digital technologies are having a major impact on all aspects of business in the technology sector—including cost management. Breakthrough innovations made possible by digital technology are enabling companies to operate and compete more effectively in an increasingly digital world. They also have the potential to enable new levels of cost savings
Digital and technology solutions applied to cost management in the technology sector
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in Technology
Survey findings1 In the tech sector, cloud was the most widely implemented technology covered by the survey (51%); automation was the
least widely implemented (30%).2 Cloud was also the most widely implemented globally across industries (49%), followed by business intelligence (35%).3 Implementation levels in the tech sector were consistently higher than the global averages for all technologies.
Region-specific findingsA United States – Cloud was the most widely implemented technology (66%); cognitive was the least (34%).B Latin America – Cloud was the most widely implemented technology (50%); automation was the least (19%, lowest of any
technology in any region)C Europe – Cloud was the most widely implemented technology (51%); automation was the least (26%).D Asia Pacific – Unlike all other regions, business intelligence was the most implemented technology in Asia Pacific (50%);
automation was the least (29%).
Cloud leads the packAmong the technologies covered by the survey, the most widely implemented in the tech sector over the past 24 months was cloud (51%), followed by business intelligence (44%) and cognitive (36%). Cloud was also the most widely implemented technology globally across industries
(49%). However, implementation levels varied widely by technology and region. For example, the US level of cloud implementation was 66%, by far the highest level for any of the surveyed technologies in any region (see figure 26).
Figure 26. Technology implementation levels (past 24 months)
Global Technology US (Tech) LATAM (Tech) Europe (Tech) APAC (Tech)0
10
20
30
40
50
60
70
% o
f tot
al r
espo
nden
ts
Automation: Robotics Process Automation
Cognitive technologies: Artificial intelligence and machine learning
Business Intelligence (Not including Cognitive or AI)
Cloud Solutions
25% 25%
35% 35%30%
36%
19%
50% 50%51%
40%
31%
48%
44% 44%
51%
31%
45%
66%
26%29%
43%
2
2
49%
34%
1
1
3 3
A
A
B
B C
C
D
D
3736
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 TIn the tech sector, the top reason for applying cloud is to reduce costs and increase productivity (69%); globally, the top reason is to
tighten data security and improve business control (64%).2 For RPA, reducing costs and increasing productivity is the top reason both in the tech sector (80%) and globally across industries (80%).3 For cognitive/AI, reducing costs and increasing productivity is also the top reason both in the tech sector (51%) and globally across
industries (76%).
Region-specific findingsA United States – Reducing costs and increasing productivity is the top reason for applying each of the three technologies: cloud (63%),
RPA (79%), and cognitive (52%).B Latin America – Reducing cost and increasing productivity is the top reason for applying cloud in Latin America (92%, the highest
number for any technology in any region).C Europe – Consistent with the overall results for the technology sector, reducing costs and increasing productivity is the main reason
for applying each of the three technologies in Europe: cloud (67%), RPA (75%), and cognitive (40%).D Asia Pacific – Reducing costs and increasing productivity is the key reason for applying of the three technologies: cloud (67%), RPA
(83%), and cognitive/AI (55%).
Top reasons for applying digital technologiesIn the tech sector, reducing costs and increasing productivity is the main reason for applying cloud, robotic process
automation (RPA), and cognitive/AI technologies (see figure 27).
Figure 27. Reasons for applying technologies
0
10
20 30 40 50 60 70 80 90 1000
10
20 30 40 50 60 70 80 90 100
Cloud
% o
f tot
al r
espo
nden
ts
0
10
20 30 40 50 60 70 80 90 100
APAC (Tech)
Europe (Tech)
LATAM (Tech)
US (Tech)
Technology
Global
63% 80% 76%
56%
59%
68%
51%
37%
36%
48%
52%
60%
34%
41%
62%
50%
42%
65%
40%
32%
32%
38%
55%
37%
32%
50%
57%
53%
69%
80%
80%
80%
53%
39%73%
79%
71%
57%
64%
20%
28%
75%
58%
33%
67%
83%
44%
22%
78%
43%
48%
64%
69%
44%
45%
62%
63%
37%
42%
58%
92%
54%
62%
77%
67%
67%
50%
42%
63%
41%
37%
59%
RPA Cognitive & AI
Reduce Costs and Increase Productivity
Increase revenue Enhance product/service capabilities Tighten data security and Improve business control
1
1
C CC
2
2
B
D D D
3
3
A A A
Survey findings1 When implementing cloud, 51% of tech companies had their expectations met and 35% had their expectations exceeded, similar to
the global results.2 When implementing RPA, 33% of tech companies had their expectations met and 39% had their expectations exceeded, lower than
the global results.3 When implementing cognitive/AI, 41% of tech companies had their expectations met and 41% had their expectations exceeded,
similar to the global results.
Region-specific findingsA United States – Cognitive/AI had the highest percentage of respondents whose expectations were met or exceeded (80%); RPA
had the lowest (71%).B Latin America – RPA had the highest percentage of respondents whose expectations were exceeded (80%, the highest level for
any technology in any region).C Europe – On average, Europe had the highest percentage of respondents with results that were below expectations: cloud (29%),
RPA (50%), and cognitive/AI (30%).D Asia Pacific – Across all technologies, more than 83% of APAC respondents had their expectations met or exceeded.
Most technology implementations meet or exceed expectationsWhen implementing each of the technologies covered by the survey, more than 72% of tech companies had their expectations met or exceeded (see figure 28).
Figure 28. Results of implementing technologies
Global Technology US (Tech)
LATAM (Tech)
Europe(Tech)
Unable to assess results at this point
Results according to expectations
Results below expectations
Results above expectations
Cloud
APAC (Tech)
Global Technology
RPA
Global Technology
Cognitive & AI
35%
36%
41%
50%44%
44%
11% 15%
55%
30%
58%
32%
10%
30%
41%
16%
47%
16%
39%
57%42%
50%
8%
33%
50%
17%
14%
21%
80%
20%
35%
42%
46%
48%44%
63%
29%
32% 46%
8%
48%
14%13%29%
56%
2%
16%
41%33%
23% 26%
1%
1% 2%
10%10%
2%7%
0%
0% 0% 0%
0% 0%
3%
10%
0% 4% 4%0%
8%
1
1
2
2
33
A
A
B
C
C
C
D
D
D
US (Tech)
LATAM (Tech)
Europe(Tech)
APAC (Tech)
US (Tech)
LATAM (Tech)
Europe(Tech)
APAC (Tech)
38 39
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 TIn the tech sector, the top reason for applying cloud is to reduce costs and increase productivity (69%); globally, the top reason is to
tighten data security and improve business control (64%).2 For RPA, reducing costs and increasing productivity is the top reason both in the tech sector (80%) and globally across industries (80%).3 For cognitive/AI, reducing costs and increasing productivity is also the top reason both in the tech sector (51%) and globally across
industries (76%).
Region-specific findingsA United States – Reducing costs and increasing productivity is the top reason for applying each of the three technologies: cloud (63%),
RPA (79%), and cognitive (52%).B Latin America – Reducing cost and increasing productivity is the top reason for applying cloud in Latin America (92%, the highest
number for any technology in any region).C Europe – Consistent with the overall results for the technology sector, reducing costs and increasing productivity is the main reason
for applying each of the three technologies in Europe: cloud (67%), RPA (75%), and cognitive (40%).D Asia Pacific – Reducing costs and increasing productivity is the key reason for applying of the three technologies: cloud (67%), RPA
(83%), and cognitive/AI (55%).
Top reasons for applying digital technologiesIn the tech sector, reducing costs and increasing productivity is the main reason for applying cloud, robotic process
automation (RPA), and cognitive/AI technologies (see figure 27).
Figure 27. Reasons for applying technologies
0
10
20 30 40 50 60 70 80 90 1000
10
20 30 40 50 60 70 80 90 100
Cloud
% o
f tot
al r
espo
nden
ts
0
10
20 30 40 50 60 70 80 90 100
APAC (Tech)
Europe (Tech)
LATAM (Tech)
US (Tech)
Technology
Global
63% 80% 76%
56%
59%
68%
51%
37%
36%
48%
52%
60%
34%
41%
62%
50%
42%
65%
40%
32%
32%
38%
55%
37%
32%
50%
57%
53%
69%
80%
80%
80%
53%
39%73%
79%
71%
57%
64%
20%
28%
75%
58%
33%
67%
83%
44%
22%
78%
43%
48%
64%
69%
44%
45%
62%
63%
37%
42%
58%
92%
54%
62%
77%
67%
67%
50%
42%
63%
41%
37%
59%
RPA Cognitive & AI
Reduce Costs and Increase Productivity
Increase revenue Enhance product/service capabilities Tighten data security and Improve business control
1
1
C CC
2
2
B
D D D
3
3
A A A
Survey findings1 When implementing cloud, 51% of tech companies had their expectations met and 35% had their expectations exceeded, similar to
the global results.2 When implementing RPA, 33% of tech companies had their expectations met and 39% had their expectations exceeded, lower than
the global results.3 When implementing cognitive/AI, 41% of tech companies had their expectations met and 41% had their expectations exceeded,
similar to the global results.
Region-specific findingsA United States – Cognitive/AI had the highest percentage of respondents whose expectations were met or exceeded (80%); RPA
had the lowest (71%).B Latin America – RPA had the highest percentage of respondents whose expectations were exceeded (80%, the highest level for
any technology in any region).C Europe – On average, Europe had the highest percentage of respondents with results that were below expectations: cloud (29%),
RPA (50%), and cognitive/AI (30%).D Asia Pacific – Across all technologies, more than 83% of APAC respondents had their expectations met or exceeded.
Most technology implementations meet or exceed expectationsWhen implementing each of the technologies covered by the survey, more than 72% of tech companies had their expectations met or exceeded (see figure 28).
Figure 28. Results of implementing technologies
Global Technology US (Tech)
LATAM (Tech)
Europe(Tech)
Unable to assess results at this point
Results according to expectations
Results below expectations
Results above expectations
Cloud
APAC (Tech)
Global Technology
RPA
Global Technology
Cognitive & AI
35%
36%
41%
50%44%
44%
11% 15%
55%
30%
58%
32%
10%
30%
41%
16%
47%
16%
39%
57%42%
50%
8%
33%
50%
17%
14%
21%
80%
20%
35%
42%
46%
48%44%
63%
29%
32% 46%
8%
48%
14%13%29%
56%
2%
16%
41%33%
23% 26%
1%
1% 2%
10%10%
2%7%
0%
0% 0% 0%
0% 0%
3%
10%
0% 4% 4%0%
8%
1
1
2
2
33
A
A
B
C
C
C
D
D
D
US (Tech)
LATAM (Tech)
Europe(Tech)
APAC (Tech)
US (Tech)
LATAM (Tech)
Europe(Tech)
APAC (Tech)
38 39
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 Automation (63%) and cognitive/AI (59%) are expected to be the most actively implemented technologies in the tech sector over the
next 24 months.2 Similar to the tech sector, automation (62%) and cognitive/AI (63%) are expected to be the most actively implemented technologies
globally across industries.3 The expected implementation level for cognitive/AI is higher globally across industries than in the tech sector alone (+4 percentage
points).
Region-specific findingsA United States – Over the next 24 months the most actively implemented technologies are expected to be cognitive/AI (48%) and
business intelligence (48%); the least actively implemented technology is expected to be cloud (17%), the lowest level for any of the technologies in any region).
B Latin America –Automation is expected to be the most actively implemented technology (81%, the highest level for any of the technologies in any region); cloud is expected to be the least actively implemented (54%).
C Europe – The most actively implemented technology is expected to be automation (66%); the least actively implemented technologies are expected to be cloud (55%) and business intelligence (55%).
D APAC – Automation is expected to be the most actively implemented technology (68%); cloud is expected to be the least actively implemented (56%).
High levels of technology implementation are expectedConsistent with the global results across industries, the technologies expected to be most actively implemented in the tech sector over the next 24 months are automation (63%) and cognitive (59%). The technology expected to be
least actively implemented is cloud (47%), most likely because current implementation levels for cloud are already very high (see figure 29).
Figure 29. Technology implementation levels over the next 24 months
0
10
20
30
40
50
60
70
80
APAC (Tech)Europe (Tech)LATAM (Tech)US (Tech)TechnologyGlobal
% o
f tot
al r
espo
nden
ts
In process of implementationNot implemented but planned
38% 39
%
39%
33%
37%
42%
24%
24%
62% 63%
47%
63%59% 58%
47%
20%
14%
26%
18%
17%
14% 14
%
40%
40%
37%
44%
59%
68%
60%60%56%
46%
38%
42%
27%
27%
15%
54%
38%
18%
81%
73% 73%
54%
36%
34%
43%
23%
23%
19%
45%
38%
13%
17%
16%
16%
57%
66%
55%55%
34%
21%
40%
17%
3%
38%
14%
10%
48%48%
38%
17%
Automation: Robotics Process Automation
Cognitive technologies: Artificial intelligence and machine learning
Business Intelligence (Not including Cognitive or AI)
Cloud Solutions
2 2
33
11
A A
A
B
B
D
D
C
C C
Survey findings1 Tech companies with a designated digital leader achieve much higher levels of technology implementation (+165%).2 Globally across industries, the impact of a designated digital leader on technology implementation levels is very high (+118%), but not
as high as in the tech sector.3 In the tech sector, a designated digital leader has the greatest impact on implementation levels for automation (+775% for the tech
sector, +222% globally across industries).
Region-specific findingsA United States – A designated digital leader appears to have the largest impact on automation implementation (+321%); the smallest
impact appears to be on implementation of cloud (+20%).B Latin America – For automation, the level of implementation increases from 0% to 26% with the presence of a designated
digital leader.C Europe – A designated digital leader appears to have the largest impact on cognitive technologies (0% to 48%).D Asia Pacific – Cognitive technologies see a significant increase in implementation due to the presence of a designated digital leader
(0% to 34%).
Digital leaders make a differenceAlthough the impact varies by region and technology, on average tech companies with a designated digital leader achieve much higher levels of technology implementation (+165%), which is even greater than the impact of a digital leader globally across industries (+118%) (see figure 30).
Figure 30. Impact of a designated digital leader
0
10
20
30
40
50
60
70
80
Global Technology US (Tech) LATAM (Tech)
Automation: Robotics Process Automation
Average Cognitive technologies: AI and machine learning
Business intelligence (not including Cognitive or AI)
Cloud solutions0
10
20
30
40
50
60
70
80
Europe (Tech) APAC (Tech)
9%4%
17% 17%14% 14% 14%14%
0%0% 0%
10%8%
17% 17% 17%23%
30% 31%
57%
20%
0%0%
29% 29%
0%
118%
165%
222%
775%
190%
413%129%
109%
77%
77%
37%
45%
29% 35
%
59%
26%
29% 32
%
29%
41%
41%
42%
48%
34%
39% 48
%
50%
32%
45%
54%
53%
55%
68%
63%
55%
46%
2
3
3
1
A
A
B DC
Designated leader
No designated leader
40 41
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Survey findings1 Automation (63%) and cognitive/AI (59%) are expected to be the most actively implemented technologies in the tech sector over the
next 24 months.2 Similar to the tech sector, automation (62%) and cognitive/AI (63%) are expected to be the most actively implemented technologies
globally across industries.3 The expected implementation level for cognitive/AI is higher globally across industries than in the tech sector alone (+4 percentage
points).
Region-specific findingsA United States – Over the next 24 months the most actively implemented technologies are expected to be cognitive/AI (48%) and
business intelligence (48%); the least actively implemented technology is expected to be cloud (17%), the lowest level for any of the technologies in any region).
B Latin America –Automation is expected to be the most actively implemented technology (81%, the highest level for any of the technologies in any region); cloud is expected to be the least actively implemented (54%).
C Europe – The most actively implemented technology is expected to be automation (66%); the least actively implemented technologies are expected to be cloud (55%) and business intelligence (55%).
D APAC – Automation is expected to be the most actively implemented technology (68%); cloud is expected to be the least actively implemented (56%).
High levels of technology implementation are expectedConsistent with the global results across industries, the technologies expected to be most actively implemented in the tech sector over the next 24 months are automation (63%) and cognitive (59%). The technology expected to be
least actively implemented is cloud (47%), most likely because current implementation levels for cloud are already very high (see figure 29).
Figure 29. Technology implementation levels over the next 24 months
0
10
20
30
40
50
60
70
80
APAC (Tech)Europe (Tech)LATAM (Tech)US (Tech)TechnologyGlobal
% o
f tot
al r
espo
nden
ts
In process of implementationNot implemented but planned
38% 39
%
39%
33%
37%
42%
24%
24%
62% 63%
47%
63%59% 58%
47%
20%
14%
26%
18%
17%
14% 14
%
40%
40%
37%
44%
59%
68%
60%60%56%
46%
38%
42%
27%
27%
15%
54%
38%
18%
81%
73% 73%
54%
36%
34%
43%
23%
23%
19%
45%
38%
13%
17%
16%
16%
57%
66%
55%55%
34%
21%
40%
17%
3%
38%
14%
10%
48%48%
38%
17%
Automation: Robotics Process Automation
Cognitive technologies: Artificial intelligence and machine learning
Business Intelligence (Not including Cognitive or AI)
Cloud Solutions
2 2
33
11
A A
A
B
B
D
D
C
C C
Survey findings1 Tech companies with a designated digital leader achieve much higher levels of technology implementation (+165%).2 Globally across industries, the impact of a designated digital leader on technology implementation levels is very high (+118%), but not
as high as in the tech sector.3 In the tech sector, a designated digital leader has the greatest impact on implementation levels for automation (+775% for the tech
sector, +222% globally across industries).
Region-specific findingsA United States – A designated digital leader appears to have the largest impact on automation implementation (+321%); the smallest
impact appears to be on implementation of cloud (+20%).B Latin America – For automation, the level of implementation increases from 0% to 26% with the presence of a designated
digital leader.C Europe – A designated digital leader appears to have the largest impact on cognitive technologies (0% to 48%).D Asia Pacific – Cognitive technologies see a significant increase in implementation due to the presence of a designated digital leader
(0% to 34%).
Digital leaders make a differenceAlthough the impact varies by region and technology, on average tech companies with a designated digital leader achieve much higher levels of technology implementation (+165%), which is even greater than the impact of a digital leader globally across industries (+118%) (see figure 30).
Figure 30. Impact of a designated digital leader
0
10
20
30
40
50
60
70
80
Global Technology US (Tech) LATAM (Tech)
Automation: Robotics Process Automation
Average Cognitive technologies: AI and machine learning
Business intelligence (not including Cognitive or AI)
Cloud solutions0
10
20
30
40
50
60
70
80
Europe (Tech) APAC (Tech)
9%4%
17% 17%14% 14% 14%14%
0%0% 0%
10%8%
17% 17% 17%23%
30% 31%
57%
20%
0%0%
29% 29%
0%
118%
165%
222%
775%
190%
413%129%
109%
77%
77%
37%
45%
29% 35
%
59%
26%
29% 32
%
29%
41%
41%
42%
48%
34%
39% 48
%
50%
32%
45%
54%
53%
55%
68%
63%
55%
46%
2
3
3
1
A
A
B DC
Designated leader
No designated leader
40 41
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Cost management practices and approaches have grown increasingly sophisticated over time, with digital solutions—although still maturing—now representing the most advanced level of cost management. Companies that relied on more traditional cost management methods in the past are now finding that digital solutions can open the door to a whole new level of savings—as well as enable new and more innovative business models.
The rise of digital technologies and innovations is also contributing to a shift in how technology companies around the world approach cost management, with the save-to-grow mindset from 2017 steadily expanding into a save-to-transform mindset where investments in digital enablement and transformational technologies play a key role.
Save-to-transform as a catalyst for embracing digital disruption
A Cybersecurity and digital disruption are among the top three external risks in the technology sector (both at 66%), only surpassed by macroeconomic concerns (72%).
1 Over the next 24 months, technology implementation is expected to be the top strategic priority for the tech sector (82%), exceeding the global average (73%).
2 Technology implementation as a strategic priority is expected to increase by 4% from the past 24 months.
Digital rises to the top of the agendaCybersecurity and digital disruption are both recognized as critical risks in the technology sector. Meanwhile, technology implementation has emerged as the tech sector’s top
strategic priority over the next 24 months (82%)—a 4% increase over the past 24 months (see figure 31).
Figure 31. Digital-related business trends
Cybersecurity and digital disruption as external risks Technology implementation as a strategic priority
0.0
12.5
25.0
37.5
50.0
62.5
75.0
87.5
100.0
0.0
12.5
25.0
37.5
50.0
62.5
75.0
87.5
100.0
64%
72%
63% 65%60%
66%61%
66%
73%
79%82%
Political climate
Commodity pricefluctuations
Macroeconomicconcerns
Credit risks
Currency fluctuations
Cyber security concerns
New market entrants
Digital disruption
Past 24 months Next 24 months
Cybersecurity (66%) and digital disruption (66%) are two of the tech
sector’s top three external risks
Technology implementation has risen to become the tech sector’s top
strategic priority
GlobalTechnology
+4%
Digital disruptionCybersecurityMacroeconomic concerns
% o
f tot
al r
espo
nden
ts
% o
f tot
al r
espo
nden
ts
1
1
2
A A73%
4342
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sectorSave-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Cost management practices and approaches have grown increasingly sophisticated over time, with digital solutions—although still maturing—now representing the most advanced level of cost management. Companies that relied on more traditional cost management methods in the past are now finding that digital solutions can open the door to a whole new level of savings—as well as enable new and more innovative business models.
The rise of digital technologies and innovations is also contributing to a shift in how technology companies around the world approach cost management, with the save-to-grow mindset from 2017 steadily expanding into a save-to-transform mindset where investments in digital enablement and transformational technologies play a key role.
Save-to-transform as a catalyst for embracing digital disruption
A Cybersecurity and digital disruption are among the top three external risks in the technology sector (both at 66%), only surpassed by macroeconomic concerns (72%).
1 Over the next 24 months, technology implementation is expected to be the top strategic priority for the tech sector (82%), exceeding the global average (73%).
2 Technology implementation as a strategic priority is expected to increase by 4% from the past 24 months.
Digital rises to the top of the agendaCybersecurity and digital disruption are both recognized as critical risks in the technology sector. Meanwhile, technology implementation has emerged as the tech sector’s top
strategic priority over the next 24 months (82%)—a 4% increase over the past 24 months (see figure 31).
Figure 31. Digital-related business trends
Cybersecurity and digital disruption as external risks Technology implementation as a strategic priority
0.0
12.5
25.0
37.5
50.0
62.5
75.0
87.5
100.0
0.0
12.5
25.0
37.5
50.0
62.5
75.0
87.5
100.0
64%
72%
63% 65%60%
66%61%
66%
73%
79%82%
Political climate
Commodity pricefluctuations
Macroeconomicconcerns
Credit risks
Currency fluctuations
Cyber security concerns
New market entrants
Digital disruption
Past 24 months Next 24 months
Cybersecurity (66%) and digital disruption (66%) are two of the tech
sector’s top three external risks
Technology implementation has risen to become the tech sector’s top
strategic priority
GlobalTechnology
+4%
Digital disruptionCybersecurityMacroeconomic concerns
% o
f tot
al r
espo
nden
ts
% o
f tot
al r
espo
nden
ts1
1
2
A A73%
4342
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sectorSave-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Turnaround Fund Grow Transform
Cost levers
Liquidity Cost Growth Growth
Cost Growth Cost Cost
Talent Talent Talent Talent
Growth Liquidity Liquidity Liquidity
Prio
rity
+
-
TurnaroundSave-to-turnaround. Save-to-turnaround. Focus on immediate actions to reduce costs, maximize liquidity, achieve stability, and capture savings to avoid further deterioration of the business
FundSave-to-fund. Focus on actions that help improve cost and competitive position; avoid cuts that might inhibit future growth,; rebalance costs to fund investment in business strategy enablers.
GrowSave-to-grow. Enable or develop a scalable cost/business platform to fuel growth and investment in core capabilities while supporting a differentiated business strategy.
TransformSave-to-transform. Invest in digital technologies and technology infrastructure to make operations more efficient and effective, enabling new and more agile business models to prosper in a digitally disrupted market.
Save-to-growIn the recent past, most technology companies were firmly grounded in save-to-grow mode. Cost and growth were the main business levers, with talent (including capabilities) as another key component (see figure 32). In this mode, cost
reduction is a high priority, with cost savings used to fund growth initiatives and strategic investments that support a differentiated business strategy.
Figure 32. The continuum of cost management approaches
1. Save-to-turnaround 2. Save-to-fund 3. Save-to-grow 4. Save-to-transform
Scope Narrow Broad
Competitive situation
• Losing market share • Structural operating flaws • Liquidity concerns • Flat profit growth
• Adjusting to demand levels • Growth concerns • Healthy balance sheet • Excess cash flow/reserves • High growth potential
Playbook
Defense-oriented playbook
• Defense-oriented playbook • Short-term tactics to improve balance sheet • Cash flows • Stabilize business through any cost and/or liquidity
improvements • Compensate sales decline
Growth-oriented playbook
• Achieving profitable and sustainable growth through structural cost efficiencies and improvements
• IT investments • Innovation • Actions to strengthen performance and competitive position
Cost levers priority
Save-to-turnaround Save-to-fund Save-to-transform levers
Growth Talent Cost Liquidity Growth Talent Liquidity Cost Growth
Technology
Talent CostLiquidity
New
Low Low HighHigh Low High
Save-to-transformNow, many technology companies are moving into save-to-transform mode, with the save-to-grow mindset expanding to include a strong focus on digital enablement and technologies that can transform a business and help it
capitalize on the vast opportunities in an increasingly digital world. Shifting into save-to-transform mode means that in addition to cost, growth, talent, and liquidity, technology is also a high priority (see figure 33).
Figure 33. Save-to-grow expands into save-to-transform
Save-to-transform not only helps a company capitalize on digital opportunities, it can also position the business to withstand potential adversity that may be on the horizon –
such as an economic downturn or credit crisis – by using the power of digital solutions as the key to unlock new levels of cost savings, efficiency, and financial performance.
44 45
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Turnaround Fund Grow Transform
Cost levers
Liquidity Cost Growth Growth
Cost Growth Cost Cost
Talent Talent Talent Talent
Growth Liquidity Liquidity Liquidity
Prio
rity
+
-
TurnaroundSave-to-turnaround. Save-to-turnaround. Focus on immediate actions to reduce costs, maximize liquidity, achieve stability, and capture savings to avoid further deterioration of the business
FundSave-to-fund. Focus on actions that help improve cost and competitive position; avoid cuts that might inhibit future growth,; rebalance costs to fund investment in business strategy enablers.
GrowSave-to-grow. Enable or develop a scalable cost/business platform to fuel growth and investment in core capabilities while supporting a differentiated business strategy.
TransformSave-to-transform. Invest in digital technologies and technology infrastructure to make operations more efficient and effective, enabling new and more agile business models to prosper in a digitally disrupted market.
Save-to-growIn the recent past, most technology companies were firmly grounded in save-to-grow mode. Cost and growth were the main business levers, with talent (including capabilities) as another key component (see figure 32). In this mode, cost
reduction is a high priority, with cost savings used to fund growth initiatives and strategic investments that support a differentiated business strategy.
Figure 32. The continuum of cost management approaches
1. Save-to-turnaround 2. Save-to-fund 3. Save-to-grow 4. Save-to-transform
Scope Narrow Broad
Competitive situation
• Losing market share • Structural operating flaws • Liquidity concerns • Flat profit growth
• Adjusting to demand levels • Growth concerns • Healthy balance sheet • Excess cash flow/reserves • High growth potential
Playbook
Defense-oriented playbook
• Defense-oriented playbook • Short-term tactics to improve balance sheet • Cash flows • Stabilize business through any cost and/or liquidity
improvements • Compensate sales decline
Growth-oriented playbook
• Achieving profitable and sustainable growth through structural cost efficiencies and improvements
• IT investments • Innovation • Actions to strengthen performance and competitive position
Cost levers priority
Save-to-turnaround Save-to-fund Save-to-transform levers
Growth Talent Cost Liquidity Growth Talent Liquidity Cost Growth
Technology
Talent CostLiquidity
New
Low Low HighHigh Low High
Save-to-transformNow, many technology companies are moving into save-to-transform mode, with the save-to-grow mindset expanding to include a strong focus on digital enablement and technologies that can transform a business and help it
capitalize on the vast opportunities in an increasingly digital world. Shifting into save-to-transform mode means that in addition to cost, growth, talent, and liquidity, technology is also a high priority (see figure 33).
Figure 33. Save-to-grow expands into save-to-transform
Save-to-transform not only helps a company capitalize on digital opportunities, it can also position the business to withstand potential adversity that may be on the horizon –
such as an economic downturn or credit crisis – by using the power of digital solutions as the key to unlock new levels of cost savings, efficiency, and financial performance.
44 45
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Save-to-transform can not only help a company capitalize on digital opportunities, it can also position the company to withstand potential adversity that may be on the horizon by using the power of digital solutions as the key to unlock new levels of cost savings.
Looking ahead
46 47
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Save-to-transform can not only help a company capitalize on digital opportunities, it can also position the company to withstand potential adversity that may be on the horizon by using the power of digital solutions as the key to unlock new levels of cost savings.
Looking ahead
46 47
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
ConclusionThis year’s survey findings—consistent with our direct experience working with leading technology companies around the world—highlight the continued importance of effective cost management throughout the sector. Cost management and digital investment are very common among tech companies, not just as a way to ease the traditional trade-offs between price, customer value, and convenience, but also as a way to fund investments in technology and transformation that can help organizations position themselves for long-term success in a marketplace that is constantly evolving.
Although the survey results show that many technology companies are struggling to fully achieve their cost management goals, this should not deter their efforts. With save-to-transform, the ultimate goal is to strategically position the business for a digitally-disrupted future—not just to meet its short-term financial targets. Keeping this larger transformation objective in mind is essential to achieving sustained cost management success.
Also, while tech companies face unique challenges, the survey data shows that many of the challenges associated with cost reduction and digital transformation are common globally across industries. Leveraging external insights and lessons learned can accelerate the learning curve and help companies in the technology sector achieve their savings and transformation goals more quickly and easily.
AuthorsOmar Aguilar PrincipalStrategic Cost Transformation | Global Market Offering LeaderDeloitte Consulting LLP Email: [email protected] USA: +1 215 870 0464 International: +1 267 226 8956
David Izquierdo SánchezSenior Consultant Monitor Deloitte Deloitte Consulting SLUEmail: [email protected]
Sakshi Kastiya Consultant Strategy & Operations Deloitte Consulting India Private Limited Email: [email protected]
US Contacts
Contacts
Global Strategic Cost Transformation
Omar AguilarPrincipalStrategic Cost Transformation | Global Market Offering LeaderDeloitte Consulting LLP+1 215 870 0464 [email protected]
US Strategic Cost Transformation (MarginPLUS™) Leaders
Caleb LongenbergerPrincipal Strategy & AnalyticsMarginPLUS Co-LeadDeloitte Consulting LLP +1 513 560 3407 [email protected]
Faisal ShaikhPrincipal Mergers & AcquisitionsMarginPLUS Co-LeadDeloitte Consulting LLP+1 484 885 [email protected]
US Technology LeadersJessica KosmowskiPrincipalUS , TMT Industry National Managing Principal Deloitte Consulting LLP +1 415 786 [email protected]
Ryan JonesPrincipal US Technology Consulting Sector Leader Deloitte Consulting LLP +1 312 286 [email protected]
US Technology Team
Anne KwanManaging DirectorTMT Business Transformation LeaderDeloitte Consulting LLP +1 415 307 2454 [email protected]
Kevin NewmanPrincipalHigh-Technology, Media and Telecom M&A LeaderDeloitte Consulting LLP [email protected]
Jag jeet GillPrincipalTechnology Strategy and Architecture Deloitte Consulting LLP+1 408 834 9740 [email protected]
Nicole GallagherPrincipalS&O Operations Transformation in TMTDeloitte Consulting LLP +1 215 740 [email protected]
Raed MasoudPrincipalFinance Transformation in TMTDeloitte Consulting LLP +1 312 259 6752 [email protected]
Iain BamfordPrincipalTelecom, Media and Entertainment Deloitte Consulting LLP +1 917 913 5256 [email protected]
48 49
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
ConclusionThis year’s survey findings—consistent with our direct experience working with leading technology companies around the world—highlight the continued importance of effective cost management throughout the sector. Cost management and digital investment are very common among tech companies, not just as a way to ease the traditional trade-offs between price, customer value, and convenience, but also as a way to fund investments in technology and transformation that can help organizations position themselves for long-term success in a marketplace that is constantly evolving.
Although the survey results show that many technology companies are struggling to fully achieve their cost management goals, this should not deter their efforts. With save-to-transform, the ultimate goal is to strategically position the business for a digitally-disrupted future—not just to meet its short-term financial targets. Keeping this larger transformation objective in mind is essential to achieving sustained cost management success.
Also, while tech companies face unique challenges, the survey data shows that many of the challenges associated with cost reduction and digital transformation are common globally across industries. Leveraging external insights and lessons learned can accelerate the learning curve and help companies in the technology sector achieve their savings and transformation goals more quickly and easily.
AuthorsOmar Aguilar PrincipalStrategic Cost Transformation | Global Market Offering LeaderDeloitte Consulting LLP Email: [email protected] USA: +1 215 870 0464 International: +1 267 226 8956
David Izquierdo SánchezSenior Consultant Monitor Deloitte Deloitte Consulting SLUEmail: [email protected]
Sakshi Kastiya Consultant Strategy & Operations Deloitte Consulting India Private Limited Email: [email protected]
US Contacts
Contacts
Global Strategic Cost Transformation
Omar AguilarPrincipalStrategic Cost Transformation | Global Market Offering LeaderDeloitte Consulting LLP+1 215 870 0464 [email protected]
US Strategic Cost Transformation (MarginPLUS™) Leaders
Caleb LongenbergerPrincipal Strategy & AnalyticsMarginPLUS Co-LeadDeloitte Consulting LLP +1 513 560 3407 [email protected]
Faisal ShaikhPrincipal Mergers & AcquisitionsMarginPLUS Co-LeadDeloitte Consulting LLP+1 484 885 [email protected]
US Technology LeadersJessica KosmowskiPrincipalUS , TMT Industry National Managing Principal Deloitte Consulting LLP +1 415 786 [email protected]
Ryan JonesPrincipal US Technology Consulting Sector Leader Deloitte Consulting LLP +1 312 286 [email protected]
US Technology Team
Anne KwanManaging DirectorTMT Business Transformation LeaderDeloitte Consulting LLP +1 415 307 2454 [email protected]
Kevin NewmanPrincipalHigh-Technology, Media and Telecom M&A LeaderDeloitte Consulting LLP [email protected]
Jag jeet GillPrincipalTechnology Strategy and Architecture Deloitte Consulting LLP+1 408 834 9740 [email protected]
Nicole GallagherPrincipalS&O Operations Transformation in TMTDeloitte Consulting LLP +1 215 740 [email protected]
Raed MasoudPrincipalFinance Transformation in TMTDeloitte Consulting LLP +1 312 259 6752 [email protected]
Iain BamfordPrincipalTelecom, Media and Entertainment Deloitte Consulting LLP +1 917 913 5256 [email protected]
48 49
Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
Global ContactsEUROPE
AustriaAlexander Kainer PartnerStrategy, Analytics and M&A | Austria offering LeaderDeloitte Services Wirtschaftsprüfungs GmbH+43 664 805 372 [email protected]
BelgiumCatherine Hannosset PartnerStrategy & Business Design | Strategic Cost Transformation offering lead + 32 494 56 68 [email protected]
Ben Desmet DirectorStrategic Cost Transformation| Strategy & Business Design Deloitte Belgium+32 496 72 77 [email protected]
CroatiaZlatko BazianecPartnerStrategy and Business Design | Consulting Country LeadDeloitte Croatia+385 1 2351 [email protected]
FranceOlivier PerrinPartnerBusiness Transformation | Monitor Deloitte Deloitte France+33 6 87 14 17 [email protected]
Alexandre KuzmanovicDirectorStrategic Cost Transformation| Business Transformation Deloitte [email protected]
Jean-Michel PintoDirectorStrategic Cost Transformation| Strategy and Business Design Deloitte [email protected]
GermanyAlexander MoggPartnerDigital Transformation | Operations TransformationDeloitte Consulting GmbH+49 151 5800 [email protected]
Milan SallabaPartnerTechnology| Country Sector LeaderDeloitte Consulting GmbH+49 151 5807 [email protected]
Andreas GentnerPartnerTMT | EMEA Consulting LeaderDeloitte Consulting GmbH+49 151 1510 [email protected]
Uemit AydinPartnerStrategy & Operations | Operations TransformationDeloitte Consulting GmbH+49 151 5807 [email protected]
NetherlandsWillem Christiaan van Manen PartnerOperations Transformation | Business Model Transformation LeaderDeloitte Consulting B.V.+31 6 1004 2582 [email protected]
NordicsThomas Andersen (Denmark)PartnerTechnology | Country Sector LeadDeloitte Denmark+ 45 22 20 27 52 [email protected]
Anders Harritz Lund (Denmark)Senior ManagerStrategic Cost Transformation | Offering LeaderDeloitte Denmark+45 30 93 69 [email protected]
Tuomo Saari (Finland)PartnerStrategy, Analytics, M&A| Finland offering LeaderDeloitte Finland+35 84 0505 9159 [email protected]
Bjorn Grenman (Norway)PartnerStrategic CostTransformation| Norway offering LeaderDeloitte AS+47 911 61 [email protected]
Fredrik Gillebo (Norway)Senior ManagerStrategic Cost Transformation | Operations TransformationDeloitte AS+47 917 84 055 [email protected]
Jonas Malmlund (Sweden)PartnerDeloitte Sweden+46 75 246 33 [email protected]
IrelandAlan FlanaganPartnerFinance Transformation | Enterprise Technology and Performance LeaderDeloitte Ireland+35 314 172 [email protected]
ItalyUmberto Mazzucco Equity PartnerBusiness Model Transformation | Mergers and AcquisitionsDeloitte Consulting SRL+39 02 8332 [email protected]
SpainGorka Briones PartnerStrategic Cost Transformation | Strategy and Business Design Deloitte Consulting, S.L.+34 9 1443 [email protected]
SwitzerlandAntonio RussoPartnerAnalytics and Cognitive | Consulting Offering LeaderDeloitte Consulting AG+41 7 9102 4673 [email protected]
Patrik SpillerPartnerMonitor Deloitte | Strategy and Business Design LeaderDeloitte Consulting AG+41 7 8649 5605 [email protected]
United KingdomLorraine BarnesPartnerCore Business Operations | UK LeaderDeloitte MCS Limited+44 77 6589 [email protected]
Global ContactsGlobal Strategic Cost Transformation
Omar AguilarPrincipalStrategic Cost Transformation | Global Market Offering LeaderDeloitte Consulting LLP+1 215 870 0464 [email protected]
Global Technology
Paul SallomiPartnerTechnology | Global Sector LeaderDeloitte Tax LLP +1 408 704 4100 [email protected]
Maximilian SchroeckPartnerTechnology | Global Sector Consulting LeaderDeloitte Consulting LLP +1 408 799 6008 [email protected]
AMERICAS
BrazilHeloisa MontesPartnerStrategy, Analytics and M&A LeaderDeloitte Consultores+55 11 5186 [email protected]
Caroline Yokomizo PartnerStrategic Cost Transformation | Brazil Leader Deloitte Consultores+55 11 99258 [email protected]
Marcia Ogawa MatsubayashiPartnerTMT| Industry Country LeaderDeloitte Consultores+55 11 96398 [email protected]
Rogerio PanessaPartnerTechnology| Business Process Solutions Country LeaderDeloitte Consultores+55 11 97506 [email protected]
CanadaSimon KingSenior ManagerStrategic Cost Transformation | Operations & Organization LeadDeloitte Canada+1 437 993 4087 [email protected]
ChilePablo Tipic PartnerStrategic Cost Transformation| Operations Transformation Chile LeaderDeloitte Advisory SPA+569 6844 [email protected]
Daniel OrtegaDirectorStrategic Cost Transformation| Offering leaderDeloitte Advisory SPA+569 9649 [email protected]
Jorge RojasPartnerTechnology| Country Sector LeaderDeloitte Advisory SPA+562 2729 [email protected]
MexicoEduardo PachecoPartnerStrategic Cost Transformation | Mexico Strategy, Analytics and M&A LeaderDeloitte Consulting Mexico+52 55 5080 [email protected]
ASIA PACIFIC
AustraliaTony O’Donnell PartnerFinancial Services | Operations TransformationDeloitte Touche Tohmatsu+613 9671 [email protected]
China – Hong KongDavid Wai Kit WuPartnerFinancial Services | Operations TransformationDeloitte Advisory (Hong Kong) Limited+86 21 6141 [email protected]
IndiaGaurav GuptaPartnerBusiness Model Transformation | Operations TransformationDeloitte Touche Tohmatsu India LLP+91 12 4679 [email protected]
JapanYusuke KamiyamaPartnerMergers & Acquisitions (M&A) | Strategy, Analytics and M&A Deloitte Tohmatsu Consulting LLC+81 8 04367 [email protected]
Tetsuo TakasagoPartnerStrategic Cost Transformation | Operations Transformation LeaderDeloitte Tohmatsu Consulting LLC+81 7 04506 [email protected]
New ZealandPaul ShallardPartnerOperations Transformation | Core Business Operations LeaderDeloitte Limited+64 21 645 [email protected]
SingaporeWendy LaiPartner Banking and Capital Markets (FS) | SEA Core Business Operations LeaderDeloitte Consulting Pte Ltd+65 6232 [email protected]
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Global ContactsEUROPE
AustriaAlexander Kainer PartnerStrategy, Analytics and M&A | Austria offering LeaderDeloitte Services Wirtschaftsprüfungs GmbH+43 664 805 372 [email protected]
BelgiumCatherine Hannosset PartnerStrategy & Business Design | Strategic Cost Transformation offering lead + 32 494 56 68 [email protected]
Ben Desmet DirectorStrategic Cost Transformation| Strategy & Business Design Deloitte Belgium+32 496 72 77 [email protected]
CroatiaZlatko BazianecPartnerStrategy and Business Design | Consulting Country LeadDeloitte Croatia+385 1 2351 [email protected]
FranceOlivier PerrinPartnerBusiness Transformation | Monitor Deloitte Deloitte France+33 6 87 14 17 [email protected]
Alexandre KuzmanovicDirectorStrategic Cost Transformation| Business Transformation Deloitte [email protected]
Jean-Michel PintoDirectorStrategic Cost Transformation| Strategy and Business Design Deloitte [email protected]
GermanyAlexander MoggPartnerDigital Transformation | Operations TransformationDeloitte Consulting GmbH+49 151 5800 [email protected]
Milan SallabaPartnerTechnology| Country Sector LeaderDeloitte Consulting GmbH+49 151 5807 [email protected]
Andreas GentnerPartnerTMT | EMEA Consulting LeaderDeloitte Consulting GmbH+49 151 1510 [email protected]
Uemit AydinPartnerStrategy & Operations | Operations TransformationDeloitte Consulting GmbH+49 151 5807 [email protected]
NetherlandsWillem Christiaan van Manen PartnerOperations Transformation | Business Model Transformation LeaderDeloitte Consulting B.V.+31 6 1004 2582 [email protected]
NordicsThomas Andersen (Denmark)PartnerTechnology | Country Sector LeadDeloitte Denmark+ 45 22 20 27 52 [email protected]
Anders Harritz Lund (Denmark)Senior ManagerStrategic Cost Transformation | Offering LeaderDeloitte Denmark+45 30 93 69 [email protected]
Tuomo Saari (Finland)PartnerStrategy, Analytics, M&A| Finland offering LeaderDeloitte Finland+35 84 0505 9159 [email protected]
Bjorn Grenman (Norway)PartnerStrategic CostTransformation| Norway offering LeaderDeloitte AS+47 911 61 [email protected]
Fredrik Gillebo (Norway)Senior ManagerStrategic Cost Transformation | Operations TransformationDeloitte AS+47 917 84 055 [email protected]
Jonas Malmlund (Sweden)PartnerDeloitte Sweden+46 75 246 33 [email protected]
IrelandAlan FlanaganPartnerFinance Transformation | Enterprise Technology and Performance LeaderDeloitte Ireland+35 314 172 [email protected]
ItalyUmberto Mazzucco Equity PartnerBusiness Model Transformation | Mergers and AcquisitionsDeloitte Consulting SRL+39 02 8332 [email protected]
SpainGorka Briones PartnerStrategic Cost Transformation | Strategy and Business Design Deloitte Consulting, S.L.+34 9 1443 [email protected]
SwitzerlandAntonio RussoPartnerAnalytics and Cognitive | Consulting Offering LeaderDeloitte Consulting AG+41 7 9102 4673 [email protected]
Patrik SpillerPartnerMonitor Deloitte | Strategy and Business Design LeaderDeloitte Consulting AG+41 7 8649 5605 [email protected]
United KingdomLorraine BarnesPartnerCore Business Operations | UK LeaderDeloitte MCS Limited+44 77 6589 [email protected]
Global ContactsGlobal Strategic Cost Transformation
Omar AguilarPrincipalStrategic Cost Transformation | Global Market Offering LeaderDeloitte Consulting LLP+1 215 870 0464 [email protected]
Global Technology
Paul SallomiPartnerTechnology | Global Sector LeaderDeloitte Tax LLP +1 408 704 4100 [email protected]
Maximilian SchroeckPartnerTechnology | Global Sector Consulting LeaderDeloitte Consulting LLP +1 408 799 6008 [email protected]
AMERICAS
BrazilHeloisa MontesPartnerStrategy, Analytics and M&A LeaderDeloitte Consultores+55 11 5186 [email protected]
Caroline Yokomizo PartnerStrategic Cost Transformation | Brazil Leader Deloitte Consultores+55 11 99258 [email protected]
Marcia Ogawa MatsubayashiPartnerTMT| Industry Country LeaderDeloitte Consultores+55 11 96398 [email protected]
Rogerio PanessaPartnerTechnology| Business Process Solutions Country LeaderDeloitte Consultores+55 11 97506 [email protected]
CanadaSimon KingSenior ManagerStrategic Cost Transformation | Operations & Organization LeadDeloitte Canada+1 437 993 4087 [email protected]
ChilePablo Tipic PartnerStrategic Cost Transformation| Operations Transformation Chile LeaderDeloitte Advisory SPA+569 6844 [email protected]
Daniel OrtegaDirectorStrategic Cost Transformation| Offering leaderDeloitte Advisory SPA+569 9649 [email protected]
Jorge RojasPartnerTechnology| Country Sector LeaderDeloitte Advisory SPA+562 2729 [email protected]
MexicoEduardo PachecoPartnerStrategic Cost Transformation | Mexico Strategy, Analytics and M&A LeaderDeloitte Consulting Mexico+52 55 5080 [email protected]
ASIA PACIFIC
AustraliaTony O’Donnell PartnerFinancial Services | Operations TransformationDeloitte Touche Tohmatsu+613 9671 [email protected]
China – Hong KongDavid Wai Kit WuPartnerFinancial Services | Operations TransformationDeloitte Advisory (Hong Kong) Limited+86 21 6141 [email protected]
IndiaGaurav GuptaPartnerBusiness Model Transformation | Operations TransformationDeloitte Touche Tohmatsu India LLP+91 12 4679 [email protected]
JapanYusuke KamiyamaPartnerMergers & Acquisitions (M&A) | Strategy, Analytics and M&A Deloitte Tohmatsu Consulting LLC+81 8 04367 [email protected]
Tetsuo TakasagoPartnerStrategic Cost Transformation | Operations Transformation LeaderDeloitte Tohmatsu Consulting LLC+81 7 04506 [email protected]
New ZealandPaul ShallardPartnerOperations Transformation | Core Business Operations LeaderDeloitte Limited+64 21 645 [email protected]
SingaporeWendy LaiPartner Banking and Capital Markets (FS) | SEA Core Business Operations LeaderDeloitte Consulting Pte Ltd+65 6232 [email protected]
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Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector Save-to-transform as a catalyst for embracing digital disruption | Deloitte’s Second Biennial Global Cost Survey: Cost management practices and trends in the technology sector
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