According to Deloitte research, two out of three companies globally (66%) now have cost reduction targets exceeding 10%. The challenges of the last couple of years have led to significant issues for companies struggling with budgetary restrictions.
Organisations in every industry are experiencing new demands to transform digitally, yet they’re struggling to find the financial backing they need to stay ahead of the competition. IBM even notes that around 25% of all global public companies could run out of cash in the months ahead if they don’t make an intelligent change to their strategies.
Fortunately, there is a solution. The right technology investment strategy can simultaneously future-proof and prepare a business for transformation while reducing expenses. The key to success is taking the right approach to minimising costs in your company without hampering growth.
Companies need to consider the following when taking costs out of their business.
It’s Not Just About Boosting Profits – by Joe McGrath
Before the pandemic, the priorities of companies were often very different. For many brands, the main financial focus was building profits and increasing revenue opportunities. We were all searching for rapid sources of growth rather than thinking about how to minimise internal costs.
Companies are struggling with minimal budgets, new expenses, and increasing economic concerns. Business leaders concentrated on penetrating new markets, creating new income ventures, and even making their organisations more appealing to investors. Now, the focus is on opening up extra revenue in the business so that it’s possible to invest in future innovation.
Unfortunately, the current climate makes it difficult to achieve rapid cost savings. There’s a vicious cycle in play, wherein every effort made to reduce costs becomes redundant as more expenses emerge to take their place. According to our research, 45% of businesses have to deal with higher costs post-pandemic, for everything from training and employee retention to supplier resources.
40% of companies also say they have to change how they operate to supply their goods and services. All the while, new challenges are emerging regarding accessing the talent required to keep teams productive. 40% of brands can’t access the skills they need, and 1 in 2 organisations prioritise digital training as a result.
To thrive in the modern landscape, business leaders need to adjust their focus from profit development to making sustainable changes to how they run their workforce. The goal now is to make companies as efficient as possible.
About Joe McGrath
Joe McGrath is a respected and forward-thinking financial journalist who contributes to some of the world’s largest publishing organisations, including the Financial Times Group and Dow Jones. He is the former London Bureau Chief of Institutional Investor and was previously the Asset Management Editor at Financial News.
Technology is the Answer, What is the Problem? – by David Dungay
The pandemic has emerged as a catalyst of change for virtually every business. According to McKinsey studies, the influence of the last two years has accelerated our path towards digital transformation by around seven years. Companies have been forced to adopt new technologies faster than they would have in the past.
While many organisations are keen to leverage the benefits technology can provide, they’re not confident about the solutions they need. The right technology investments should be based around the goals of creating:
- More productive, resilient business operations: A more productive and resilient company can achieve better cost savings with minimal employee turnover and increased profit opportunities. The more productive your team becomes, the more influential the brand.
- Differentiation in customer service: Customer experience is the most important consideration for any business in the modern world. Focusing on stronger CX allows companies to preserve existing customers and attract new ones without extensive sales and marketing costs.
- Accessing new markets: Many companies are discovering a further need to expand into new markets, like online sales and subscriptions, as a way of preserving revenue. The right solutions should make this expansion as streamlined as possible.
About David Dungay
David is Editor-in-Chief at Today Digital
David has built a reputation in the telecoms and unifed communications sectors over the last 12+ years as a media professional. David joined Today Digital in 2020 to help build their offering in the technology sector and since has successfully launched new titles in the Customer Experience, Digital Workplace and Extended Reality markets. David specialises in the vibrant channel sector where he enjoys developing offerings for those that sell through partner ecosystems.
Around 98% of companies now say they believe technology can reduce their cost base, and another 95% of organisations say they’re very reliant on tech. However, it’s not enough to stock up on new innovations. Companies need to determine what solutions are critical to their cost-saving strategy to resolve current problems.
For instance, 65% of companies believe the cloud is the answer to reducing things like internal maintenance and hardware costs. However, even the cloud may present new issues, like onboarding, training, and security requirements. Robotic Process Automation appears to be part of the answer for 33% of companies, but others are concerned too much automation can harm CX strategies.
The Wrong Technology Will Kill You – by David Dungay
Effectively reducing costs in any business throughout today’s age of digital transformation requires an evolution in any brand. This does mean most companies will need to explore new technologies as solutions to their problems. However, the wrong technologies will increase costs and confusion, presenting many new problems for business leaders.
Unless companies are crystal clear from day one about the outcomes they need to secure, the risk of wasting money on unnecessary technology is high. About half of the companies who invested in digital transformation have reported disappointing results from a large investment.
For instance, 54% of business leaders are keen to deploy automation tech, but 50% of companies say they’re not achieving the right results with the automation they’ve already implemented. To avoid the risk of increasing, rather than lowering expenses, businesses need to set clear goals from the start of their investment strategy. Brands will need to:
- Define the aims of their digital transformation strategy and what they want to achieve
- Determine what to do with existing investments (Replace, integrate, or update)
- Ensure they’re adequately equipped to handle new technology with the right skills
Advice and support from expert suppliers can be beneficial during this initial planning and implementation period. 82% of business leaders now say they need more guidance from specialists to help them make the right choices with their digital transformation campaigns.
A supplier could help you to gain a better understanding of the hierarchy of issues which need to be addressed in your business, and what roadblocks may be in place to achieving your goals. This reduces the risk of making unnecessary or inefficient investments from day one.
#Helpme Action Plan – Do’s and Don’ts When Reducing Costs by Dr. Lucy Green
Reducing costs in the business environment is becoming an increasingly essential concept for all brands. However, it’s important to take the right approach
Do:
- Understand the value of reducing internal costs over increasing profits
- Know the value of having the right skills and employees in your team
- Prioritise sustainable changes to workflows and teams
- Thoroughly investigate the outcomes of each investment
- Focus on creating more productive and resilient businesses
- Work with suppliers and vendors to find the right solutions to problems
Don’t:
- Get too caught up in the desire for rapid growth
- Forget about the importance of preserving customer service
Reducing costs in the business environment is becoming an increasingly essential concept for all brands. However, it’s important to take the right approach.
About Dr Lucy Green
Dr. Lucy Green has a proven expertise for finding and developing the potential that lies within a business. Business leaders respect her strategic insight, structured methodology, and strong commercial intelligence focused on measurable revenue generation and value creation.
- Jump into using the wrong tools without the right talent in your team
- Forget about your existing investments and tools
- Implement new technology just because it’s trending