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Organizations must constantly adopt new methods and practices to stay relevant and competitive. Some seek a silver bullet in technology. Others believe cost-cutting is the surest approach to enhancing the bottom line. As customers’ preferences, needs, and expectations continue to shift, organizations must adapt to these changes and transform their approach to not only fulfilling customer needs and expectations, but also keeping margins and costs in line.

One way is to apply continuous performance improvement (CPI) into processes such as credit approval, cost management, or production. CPI is about increasing productivity and efficiency in existing, sometimes already great processes—doing things faster, better, and with less labor where possible.

Three fundamental factors in successful CPI are strategy, technology, and people.

Strategy

The primary component in CPI is “continuous.” Applying continuity is key. For instance, most organizations rely on monitoring and measuring key performance indicators (KPIs) to determine if they are growing or not. It is critical to regularly reevaluate reporting mechanisms to help ensure continued effectiveness and accuracy. Monitoring data in real time provides faster insights. Organizations must foster avenues of clear communication and collaboration between departments by sharing information, perspectives, and best practices through centralized functions and working groups.

Considerations

A successful CPI approach requires continuous evaluation of methodologies and practices.
Quantifying and demonstrating the effectiveness and impact of CPI efforts can be difficult.
Developing clear performance metrics, benchmarks, and reporting mechanisms is essential.

Technology

Organizations are always implementing new technologies and tools (e.g., generative artificial intelligence or GenAI, machine learning, data analytics, automated control testing, and real-time reporting) to enhance efficiencies. This can help organizations identify, improve, and expedite their decision-making process as well as reduce manual and repetitive tasks in real time. The right technology implementation can also help identify patterns, trends, and potential risks that would be difficult or impossible for human risk managers to detect.

Considerations

Adopting new technologies or methodologies requires specialized knowledge and expertise. It can be challenging to find the right people with the necessary skills and experience to maximize the use of technology. Employees need to thoroughly understand the tools, query the logic, and decipher the outcomes to present to management.
Implementing controls and monitoring helps to ensure the tools are working as intended.

People

Well-run organizations supplement teams with growing roles, such as data scientists, to meet the increased focus on new and emerging technologies. A strength in data science concepts and techniques is key for maximizing the use of GenAI and machine learning. Automating tasks can help organizations continuously improve performance.

Considerations

Organizations need technology to drive efficiency and productivity gains. They also need trained people to operate new technology. Hence, organizations need to invest in training to help people develop the right skills to leverage the power of new technology.
As technology advances, organizations must update job descriptions to reflect added responsibilities, novel skillsets, and new roles.

KPMG LLP (KPMG) has worked for years with several organizations leveraging CPI to help achieve their goals, including cost reduction, margin expansion, and improved efficiency. Following are three examples of how KPMG used CPI to enhance productivity and managed cost:

Maximize deal synergies after an acquisition
Technology, media, and telecom
Before

A leading technology hardware provider struggled with how to realize deal synergies after an acquisition. The technology hardware provider acquired a company with a new business model to help realize deal synergies and build mergers-and-acquisitions integration tools, capabilities, and assets that would enable future deals and integrations.

KPMG approach

KPMG deployed a variety of proprietary CPI tools and insights to help achieve the client’s objectives, including AI capabilities, integration planning and frameworks, and KPI tracking.

After

KPMG provided an automated solution to integrate new capabilities and create a platform for future deals and integrations.

Improve cost transparency
Consumer and retail

Before

A global retail chain with presence in more than 40 countries struggled with how to improve cost transparency

KPMG approach

KPMG co-developed a brand management approach by

Evaluating and aligning cost drivers across the front and back office
Allocating and aligning costs with the right cost centers and
Ultimately, providing a top-down strategic reporting view that gave the management team the insights it needed to make actionable decisions.

After

The client captured 15% growth in core profitability and reduced working capital by 5 percent.

Effectively measure and manage tech cost
Automotive

Before

A Fortune 500 automotive supplier lacked transparency and visibility into technology cost and multiple processes in day-to-day operations due to a sprawl of duplicative systems from previous acquisitions that had not yet been integrated. The company needed sufficient capital to quickly fix the issue.

KPMG approach

We redeployed certain manufacturing-related continuous improvement processes such as monitoring and measurement into the automotive company’s information technology operations.

After

The company gained true visibility into its technology costs such as software licensing and application maintenance. This allowed management to justify remedial capital expenditure to its board of directors.

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