Cost optimisation is inevitable for enterprises in today’s competitive business environment. As margins become wafer-thin, profits come through cost cuttings and efficiency improvements. Here is how businesses can apply technology to optimise costs and the top tools to realise these ways.

1. Streamline processes

In most enterprises, processes become inefficient over time. Bureaucracy makes some temporary or ad-hoc measure permanent, with no one knowing why the step exists but no one ready to remove it. Technology advances may have made some processes redundant, but the enterprise, wary of change, continues in its old ways. Such inefficiencies increase the cost of doing business.

One example is the material waste resulting from paperwork. A paperless office reduces printing documents and maintaining physical files. Technology simplifies business processes and reduces the amount of paperwork to complete tasks.

Invest in tools that enable transparency. Clear visibility of business processes makes explicit areas where inefficiencies occur. Removing such inefficiencies eliminates wasteful expenditure. It also improves quality or speeds up services, delivering a positive customer impact.

Use project management software and communication platforms to simplify tasks and ease collaboration. When employees do not have to waste effort and energy getting things done, their efficiency and productivity increase. They can deliver better quality output and complete more tasks per day.

Implement continuous monitoring. Keep track of the servers and the specs. Set up alerts and automated actions to keep performance on track and control costs within the budget. 

Reduce storage on the cloud, on-premises servers, or physical files. Store only need-to information to control data sprawl and reduce costs.

Use data to identify cost reduction opportunities within processes. Big data analytics unearth inefficiencies, unlock opportunities, and enable making data-driven decisions. 

2. Embrace the cloud and associated technologies.

Businesses move to the cloud to leverage the cost advantages and become more agile. 

The cloud reduces both set-up and maintenance costs. Reserving spot instances, capacity planning, and running workloads during off-peak hours optimise costs.

The cloud also converts capital expenses into easily attributable operational costs. The pay-as-you-go scalable cloud models allow businesses to consume only the resources used. Businesses do not have to deploy capacity that remains idle most of the year.

Virtual collaboration tools facilitate remote work. Top tools include video conferencing, project management software, and cloud-based document-sharing platforms. These tools enable seamless collaboration without the overheads associated with physical meeting rooms. 

Remote work reduces office-related expenses in a big way. The business saves on energy costs, real estate space, and other overheads. Employees save on commuting costs. Despite the risks, remote work is here to stay and delivers significant cost savings compared to traditional work.

The cost benefits notwithstanding, several pitfalls could lead to increased costs. Cloud bills skyrocket owing to over-provisioned resources and poor visibility into the environment. Use cost monitoring tools to have visibility into cloud consumption and keep costs in check. For instance, AWS Cost Explorer analyses the previous 13 months spending to forecast the expenses for the next three months. AWS Budgets limit resources to control costs and notify admins when spending exceeds the set threshold. Google and Azure also have similar services that track spending across services and issue alerts.

3. Automate tasks

Technology guides individual work and improves productivity. Increasing productivity reduces staffing costs, improves asset utilisation ratios, and maximises profits.

Robotic process automation and generative AI automate routine tasks. The benefits include speeded-up processes and better process accuracy. Automation streamlines employee onboarding, customer acquisition, and other vital tasks. Generative AI tools like ChatGPT takeover customer care, basic marketing content, and similar tasks. Human employees can focus on higher-value tasks and provide more personalised customer service.  

Consider the example of using field service management software to manage service calls. The manager can allocate work considering the shift timings and quantum of work assigned to a technician. They can also sync leave processing with job allocation to ensure new job assignment does not clash with approved leaves. Integrated inventory management ensures technicians proceed to their work site with spares. First-time fix rates increase. Integration with maps guides the field technicians takes the best routes to the work site. When technicians spend less time on the road, and more time at customer premises, their productivity gets a big boost. Integrating the field management suite with machine learning makes these tools more robust. Algorithms take over even very complex tasks such as scheduling.

4. Consider Outsourcing

In some cases, it is not feasible to manage all digital resources in-house. Outsourcing non-critical tasks may be more cost-effective. 

Outsourcing allows enterprises to make cost arbitrages. Deolitte’s 2020 Global Outsourcing Survey reports 70% of companies report cost reduction as their main motivation to outsource. Offshoring work to developing countries, such as India or the Philippines, costs about 60% to 70% less compared to work done in-house in developed countries. One of the biggest cost arbitrage opportunities is in the call centre space. As a rule of thumb, companies incur 2 to 2.5x costs internally compared to the rate charged by outsourcing vendors. 

Technology removes friction and makes outsourcing seamless. Cloud-based communication and collaboration tools such as Slack. Full-blown cloud solutions such as Nextcloud make omnichannel communication easy. It also becomes convenient to share large files, folders and links. 

Clarity on the needs prevents the risk of being oversold on any outsourcing solution.

5. Optimise hardware

One cost centre that often gets overlooked in cost-optimisation strategies is hardware. Optimised hardware takes up less space and consumes less energy. The higher quality and reliability of these devices extend the life cycle. The frequency of hardware replacements also reduces.

Upgraded hardware spots reliable and resilient components and fault-tolerant architectures. These improvements reduce system downtime and minimise maintenance costs. Reliable hardware also reduces costly service disruptions.

Virtualisation consolidates multiple physical servers into virtual machines. Virtualisation reduces the work of, say, 20 servers to a single or a few servers. Hardware and operating costs come down by around half on average. 

Automated sensor-based lighting, heating, and cooling systems optimise energy usage. 

Before upgrading any hardware, take stock of existing digital resources and identify gaps. Also, ensure all components of the upgraded hardware will achieve compatibility. Apply tools such as a network diagram tool for the review. Rank the priority of hardware assets by considering storage, processing and partner needs. 

Making hardware purchases from manufacturers will reduce costs. Also, regardless of the source, invest in a good warranty to future-proof the hardware.

The costs of doing business impact profitability and competitiveness in a big way. When businesses apply technology the right way, they can become more profitable. They can pass off some of their profits to customers, enabling them to provide better quality services at competitive prices. This creates an upward spiral of delighted customers who patronise the business more.