Cost, budget limits biggest challenges of OPEX & business transformation

Cost and budget limitations are the biggest operational excellence (OPEX) and business transformation challenges organizations will face in the next 12 months. That’s a key finding in the PEX Report 2024/25, which compiles and examines the results of a recent survey of almost 200 professionals

More than a quarter (28 percent) of respondents said that the financial implications of implementing OPEX and transformation initiatives are the greatest challenges they expect to encounter in the coming year. Other hurdles include linking process improvement with top-level business strategy (11 percent), overcoming resistance (11 percent) and ensuring a customer-centric focus throughout the organization (10 percent).

Geopolitical uncertainty and inflation trigger financial concerns

It is likely that geopolitical uncertainty, inflation and other macro factors are key contributing factors in cost/budget limitations being the biggest challenges for OPEX and business transformation right now, says Ekaterina “Katie” Curry, managing director and head of operations, multifamily/leasetrack at Millennial Specialty Insurance. However, one-fifth of respondents cited OPEX/transformation as a way to reduce operational cost or headcount.

“This underscores the critical importance of executing with excellence with a focus on simplicity, efficiency, prioritization and using affordable (free or low cost) tools,” according to Curry.

It benefits even Fortune 500 companies to adopt the mindset of operating like “lean startups” and prioritizing transformation projects based on hard dollars such as revenue generation or margin expansion. “Efficiency created by using tried and true tools like Lean Six Sigma and low or no cost open-source tools is effective,” Curry says.

A quarter of OPEX and transformation budgets expected to increase

Most annual OPEX and transformation investment budgets range from US $0 to $100,000 (33 percent), followed closely by $100,000 to $500,000 (29 percent). Just 9 percent of budgets range from $1 million to $5 million with 6 percent, standing at more than $10 million, the survey found.

A quarter of respondents (25 percent) expect their budget to increase next year, with 40 percent predicting it to stay flat. Only 9 percent expect to see budgets decline in the next 12 months.

Nao Anthony, Commonwealth Bank, and Tariq Munir, PepsiCo, discuss the challenges of digital transformation 

OPEX and business transformation don’t have to break the bank

It is possible to achieve significant advantages from OPEX and business transformation efforts without spending huge sums of money, but it requires careful planning and implementation. Quick wins of incremental improvements and process optimization can drive continuous transformation, which compounds over time, says Curry. “Continuous transformation is easier to execute, costs less and doesn’t require as much change management.”

That said, business leaders should be cautious about a drive towards cost benefits at the expense of customer satisfaction, typically a result of a lack of alignment or purpose in initiatives, warns Nao Athony, senior manager OPEX at Commonwealth Bank.

READ MORE HIGHLIGHTS FROM THE PEX REPORT 2024/25

• Half of businesses deploy enterprise-wide OPEX & transformation