Transforming for value

27 May 2011:

As organisations make internal structures more cost-effective, analysts with PwC say the process will allow companies to focus on core activities

Corporations are beginning to emerge from the retrenchment and cost cutting brought about by the recession and are now seeking to transform themselves to drive future profitable growth. This is the view of Garret Cronin and Susan Kilty, consulting and tax partners respectively with PricewaterhouseCoopers (PwC).

“Organisations are now redefining what their structures need to look like to meet both the current and the future demands of the business,” says Cronin. “There is now a lot of focus on what the best possible structure is, with companies trying to define the optimal structure for their particular needs.”

While the optimal structure may prove an elusive goal for many long-established organisations, the transformation process will still yield benefits. “Structures need to be more cost-effective,” Cronin points out. “And the transformation process will see processes becoming more simplified and standardised as a result. This will allow for a more standardised approach to managing businesses and facilitate an acceleration in decision-making capability. It’s all about having the right information at the right time and in the right hands to make those decisions.”

This may sound fairly straightforward, yet it can be anything but when it comes to restructuring existing organisations with long-established processes and protocols, not to mention embedded corporate cultures. For example, the old model for firms to expand into new markets was to more or less replicate the corporation and all its functions in miniature in each country or region. This led to massive duplication in areas such as IT, HR and accounting, and attendant higher costs.