February 28, 2018
Global Companies Are Saving Up to $1 Billion to Fund New Growth by Adopting a Zero-Based Mindset, According to Accenture
The largest ever research on zero-based budgeting shows a shift to a more holistic zero-based mindset, or ZBx, creates a culture of ownership and cost control not previously possible
NEW YORK; Feb. 28, 2018 – Leading global companies are realizing savings of up to $1 billion from the adoption of zero-based strategies, according to the largest ever study on zero-based budgeting (ZBB) strategy, conducted by Accenture (NYSE: ACN). The research, which surveyed 85 of the biggest organizations around the world, revealed that companies are moving beyond simple ZBB to a more holistic approach, or ZBx, that allows companies to uncover additional savings to fund growth initiatives.
The ‘Beyond the ZBB Buzz’ study by Accenture Strategy analyzed the practices and results of zero-based initiatives implemented by leading global companies across different industries - from consumer goods and banking to retail and life sciences. The study highlighted the exponential growth in ZBB adoption of 57 percent per year from 2011 until today, and found that the majority of companies surveyed (91 percent) have met or exceeded their financial targets.
“ZBB is rapidly helping organizations accelerate growth strategies and pivot to new digital business models,” said Kris Timmermans, Senior Managing Director and Supply Chain & Operations Strategy lead at Accenture Strategy. “Due to the savings realized, leading global companies are taking ZBB to the next level by applying a zero-based mindset – what we have termed ZBx – across all business functions to gain forensic visibility into spending and funnel savings back into high growth initiatives.”
Zero-based initiatives transforming global companies and helping them save up to $1bn – largest research on ZBB strategy from @AccentureStrat #ZBx
Zero-based strategies accelerating growth
Companies are adopting ZBB primarily to improve profitability (96 percent). Yet, nearly half (48 percent) said they were influenced by competition and 40 percent cited slow growth as a catalyst. Surprisingly, the research did not point to the common perception that companies turn to zero-based strategies in crisis mode in an M&A scenario or as the result of pressure coming from private equity funds and activist investors. Only 14 percent say M&A was a driver and even fewer (eight percent) cited PE or activist investors as a factor.
While the majority (92 percent) of companies surveyed implemented ZBB strategies to reduce general and administrative costs, the research highlights leaders are applying a zero-based mindset to other business functions, such as sales and marketing (52 percent), labor (43 percent) and logistics (42 percent). Companies are taking out inefficient money that doesn’t support business strategy and redirecting those resources into growth initiatives, digital investments and other capabilities.
Challenges to applying ZBx
Among the hardest obstacles to adopting a zero-based mindset are cultural buy-in (67 percent), change management (41 percent) and data visibility (33 percent). However, once the initiatives are in place, there is a common desire among the companies surveyed to ensure they are durable, with 77 percent investing in control and monitoring to make the results of their zero-based initiatives part of continuous improvement.
“Unlike traditional cost management techniques that use a ‘cut-the-fat and gain-it-back’ approach like every fad diet does, adopting a zero-based mindset requires a full cultural transformation within an organization. It must become ingrained in how people think and work so that it begins to just happen naturally – that’s how you prevent the ‘weight’ from coming back,” said Timmermans.
To find out more about the report, visit: https://www.accenture.com/ZBxMindset. Join the conversation at @AccentureStrat.
About the research
Accenture identified 136 major companies that use zero-based mindset (ZBx) to reduce costs and reinvest. Sixty-percent of these companies are in the top 2000 globally. From this distinct set of companies, Accenture analyzed the scope, results and practices of their ZBx programs based on 85 in-depth examinations and executive interviews carried out between November 2017 and January 2018.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 435,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.
Accenture Strategy operates at the intersection of business and technology. We bring together our capabilities in business, technology, operations and function strategy to help our clients envision and execute industry-specific strategies that support enterprise wide transformation. Our focus on issues related to digital disruption, competitiveness, global operating models, talent and leadership help drive both efficiencies and growth. For more information, follow @AccentureStrat or visit www.accenture.com/strategy.
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