2022-10-19-科尔尼-Bringing_a_target_cost_mindset_to_fixed-broadband_operators_9页_521kb

报告摘要

Summary of Target Cost Mindset for Fixed-Broadband Operators

Overview

Fixed broadband operators in the United States are experiencing significant cost pressures from factors like inflation, supply chain issues, and rising labor costs. These challenges are exacerbated by the current "fiber optic gold rush," driven by federal and private investments to expand broadband access, particularly in underserved areas. To remain profitable and fund ongoing buildouts, operators must adopt a target cost mindset, which involves an enterprise-wide approach to strategically manage costs and improve profitability in a dynamic industry. This mindset positions companies for long-term success, including potential consolidation through acquisitions or being acquired.

Key Elements of the Target Cost Approach

The target cost methodology emphasizes defining a target business and operating model, identifying relevant output drivers, and setting target costs at a granular level to support strategic goals. Unlike traditional cost-cutting efforts that often lead to short-term gains followed by "leakage" and suboptimal results, target costing challenges businesses to think innovatively. For instance, operators can determine required unit costs to achieve specific penetration rates or customer offers. This process is integrated with multiyear budgets and requires strong organizational buy-in. Kearney highlights that this strategic approach differs from reactive cuts, instead focusing on proactive cost transformation through comprehensive planning and benchmarking.

Crucial Cross-Functional Cost Reduction Levers

Achieving sustainable cost reductions in today's environment requires a whole-of-company effort, as simple unit-cost reductions are largely exhausted. Key areas for focus include:

Product Portfolio: Simplifying offerings to reduce complexity and migrating customers to streamlined options.
Customer Interaction: Shifting toward digital and automated channels to optimize service delivery.
Technology: Simplifying applications to reduce capital expenditures and support key customers through lean designs.
Processes and Resource Configuration: Redesigning workflows and leveraging digitization to eliminate waste.
Organization and Culture: Resizing teams using a zero-based approach and flattening structures to enhance agility and break down silos.

This collaborative effort demands that business units transcend internal boundaries to align on strategies, fostering innovation and cost savings that cannot be achieved in isolation. Case studies, such as a Dutch mobile provider, demonstrate how cross-functional teaming can yield substantial reductions in indirect costs and improve financial performance.

Embedding Strategic Sourcing

Strategic sourcing should be embedded enterprise-wide to support cost management and funding initiatives. Operators are advised to use rapid sourcing efforts to identify quick savings, which can fund larger target cost programs. Additionally, developing a partner ecosystem—such as alliances with electric utilities or joint ventures—can optimize external spending beyond transactional relationships, unlocking value through shared resources and reducing in-house requirements.

Benefits and Outcomes

Adopting a target cost mindset enables operators to build a lower cost structure now for immediate profitability targets and buildout funding. Over the long term, cost-effective operators are better positioned for industry consolidation, competitively better through efficient operations, and capable of achieving higher returns on investment. Buchanan emphasizes that early adopters gain a competitive edge by linking cost strategies directly to business outcomes.