I read an interesting article in the McKinsey Quarterly (free registration is required) on “Five ways CFOs can make cost cuts stick“. From my perspective most interesting part is the graph that shows that while cost of goods sold (COGS) has gone down 2.7% over the last decade, sales, general and administrative (SG&A) costs haven’t budged.
A lot of things go into SG&A (like travel and offices), but for most companies the bulk of SG&A is in compensation, or people costs. I think that explains the lack of progress in the area – most SG&A type work is knowledge work (or call it it office work if you like) and there have been very few effective widespread productivity enhancers for this type of work in the last decade.
I believe that to bring real, widespread productivity gains to this type of work – we will need a combined process+collaboration perspective focused on knowledge worker productivity. The key will be to bring transparency to knowledge work – and just enough control to manage the process, but no such much as to strangle it. The article alludes to the need for transparency in the article and Jim McGee has an excellent post on the need for transparency – “Managing the visibility of knowledge work“. Solving the problem also needs collaboration within the process context as John Tropea discusses in his latest blog on “Have we been doing Enterprise 2.0 in reverse : Socialising processes and Adaptive Case Management” .
I am hoping that Adaptive Case Management will be the begining a real focus on this issue. Maybe this can be the decade that we really start lowering SG&A cost by enhancing knowledge worker productivity.
A reminder – we will be having a tweetjam on Adaptive Case Management on July 15 at 12pm EDT, to find out more click here.