Drive business performance with strategic cost optimization

Identify which costs to reduce and protect to drive growth and efficiency, even during inflation

Download your guide to cost optimization

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Discover 3 keys to managing your organization’s costs

Your guide to optimizing costs strategically, not tactically.

Strategic cost optimization rarely succeeds without three things:

Standardized cost management framework
Shared understanding of cost-to-value relationships
Consistent definition of success beyond cost savings

Download this guide to increase the success of your strategic cost optimization initiatives.

Strategic cost optimization delivers on costs and growth simultaneously

Organizations have been reintroducing costs while pursuing postpandemic growth opportunities, but now must optimize costs to navigate new economic headwinds, including input shortages and inflation.

In these conditions, it’s even more important to optimize costs without compromising growth. Watch this video for a quick primer on strategic cost optimization. (Also see the FAQ, “Is cost optimization my responsibility?”)

A cost management framework to prioritize investments

The Gartner Cost Optimization Decision Framework helps you and your fellow executives prioritize cost optimization opportunities by value, not just the potential to reduce spending.

Use this framework to:

Create a prioritized list of your most promising cost optimization opportunities based on a shared framework
Assess the level of impact of your cost plans across key decision factors/criteria
Evaluate the trade-offs between the benefits, costs, risks, and viability of different cost control initiatives
Map cost reductions on a simple grid to show the trade-offs and help build buy-in for your cost reduction strategy

Download the cost optimization framework for your function

Finance

HR

Information Technology

Marketing

Public Sector IT

Sales

Customer Service & Support

Supply Chain

Additional cost optimization questions Gartner can help answer

What is cost optimization?

Cost optimization is a business-focused, continuous discipline to drive spending and cost reduction, while maximizing business value.

Why is cost optimization important?

By taking a strategic cost optimization approach, business leaders can make more informed budgeting and spending decisions while investing for growth and digitalization.

What is the difference between cost reduction and cost optimization?

Cost optimization is a continuous, business focused discipline aimed at maximizing business value while reducing costs. Cost cuts are a short-term move to decrease expenses. See these articles on cost-cutting:

Is cost optimization my responsibility?

Strategic cost optimization is a cross-functional collaborative effort across functions and businesses — and their leaders. It is not the job only of the CFO or finance team.

Given the inflationary environment, for example, margin management (e.g., pricing changes) can provide some respite against rising costs, but executive leaders must manage the pressure on profitability together. Three actions are needed to optimize costs without compromising growth:

Align costs disproportionately to enhancing points of differentiation (e.g., digital capabilities that competitors cannot easily replicate).
Embrace positive aspects of zero basing (i.e., a focus on value) beyond budgeting season to how ongoing spending decisions are made.
Digitalize at scale to unlock productivity gains that can offset inflation.