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How can ZBx drive visibility? Companies sit on millions of pieces of data, scattered across the organization. Ultimately, it’s difficult to drive conclusions from disparate data streams. The combination of Artificial Intelligence (AI) and data visualization technologies can aggregate and display category spend data more effectively. Additionally, AI can make it easier for managers to access the information they need to drive the business. For example, rather than sorting through spreadsheets, users can ask chat bots questions like, “What did we spend on promotion last year by geography?” Chat bots can retrieve answers that support more sound decisions.
Once you’ve gained the visibility to understand your spend, how do you optimize it? That’s where value targeting comes in. Many cost curves have undergone fundamental transformation as new solutions have changed the way work gets done. Consider in-store advertising. It’s less expensive to execute thanks to the decreased costs of beacons and supporting technologies. And built-in analytics can give greater insight into exactly what motivates purchases. Rather than taking a historical view of spend, successful organizations will approach value targeting with the data and insights to both optimize spend and support a more precise targeting of the end customer new products, solutions and services.
To gain control of spending, it’s critical to assign category ownership to each area of the company. In the past, executives didn’t have the dynamic reporting and data visualization needed to understand their given area of operation. These tools shine a light on all relevant data across the company to provide a true view of spend. With this understanding, managers are empowered to take on an active role, treating company money as if it’s their own.
Our research found that successful companies are linking ZBB to the corporate strategy through profitability (95 percent), followed by growth (56 percent).1 Zero-based Budgeting is being used to make strategic decisions on the appropriate spending levels required to reach even the furthest stretch goals. How exactly? By building budgets “bottom up” according to specific cost drivers which vary by category. Cloud-based tools are making the process smooth and flexible. And forward-looking and predictive. Managers can answer questions like: “What if I allocate funds somewhere ese?” “What is the impact on profit?” “On brand performance?” These tools allow them to “see” the result of their decisions—before they’re executed— through detailed simulations. Net-net: ZBB not only drives more transparency into the way budgets are constructed, it also drives tremendous buy-in as budgets are built and owned by their respective owners.
Execute initiatives: Organizations can’t drive toward tomorrow’s business outcomes using yesterday’s tools and platforms. That’s why it’s important to establish smart consumption policies and systems to drive users down the best path to purchase. This is aided by digital procurement platforms that guide users through the latest corporate practices. The result: Employees will make the smartest purchases based on the insights gleaned from intuitive, easy-to-use systems.
To make sure all the previous steps hold today and in the long run, it’s critical to instill control and monitoring. ZBx drives top-to-bottom and left-to-right transparency leaving “no place to hide” when it comes to understanding decisions. Thanks to technology, Key Performance Indicators can be established to ensure that the company is holding on its strategic directions and track the strategic initiatives to ensure they’re working toward larger company goals. For the leading companies in our survey, ZBx savings were being redirected into growth initiatives (52 percent), digital (31 percent), other capabilities (29 percent) and the bottom line (15 percent).2 If it sounds basic. It’s not. Many companies drive their operations based on gut instinct and assumptions, in large part because they lack the easy-to-use, dynamic insights supported by digital technologies.