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Cost reduction strategies

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Mary Lim
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Many businesses have seen an increase in their spending lately, in turn urging them to realise higher revenues as well. However, this can be a quite lengthy and complicated process. Another possible solution is to focus on cost reduction strategies. In this article we’ll take a look at different ways to reduce business operating costs by using IT.

Where to start with cost reduction?

The biggest mistake any business can make is to make across-the-board cuts in an effort to alleviate the problem as quickly as possible. Non-strategic solutions like this are short term fixes and can result in even more expenses at later stages. Instead, companies should explore ways to save money in the long run and carefully develop comprehensive strategies that will optimise current operations and restructure existing processes.

The key component in this process is technology. Latest developments and enhancements should be researched thoroughly in order to identify the appropriate tools, applications and software that will make your company’s processes more effective. Using IT to improve productivity is not a new concept. However, because every company has different needs and wants, it is extremely important to come up with suitable solutions that will address the unique requirements of your company and enable you to make improvements.

Cost reduction strategies

There are many different strategies for reducing operating costs. Not all of the ones we mention in this article will be applicable to your company and the industry you operate in, of course. When looking for opportunities to reduce costs, businesses should start with their processes, customers and suppliers.

Using IT and virtual systems to enable cost reduction can be done in many ways:

  • Process optimisation – making current processes better, faster and cheaper.
  • Simplifying and automating operations – having an automatic quoting system, enabling customers to choose services, upgrades, etc.
  • Focusing on profitable products and services – finding ways to further improve and sell more of these.
  • Outsourcing non-core activities – there are companies out there that specialise in many different industries and in certain instances, it can be more effective to let them manage parts of your business.

Some of the key technologies for reducing costs are:

  • Analytical tools – they enable you to examine various aspects of your business and gain a better understanding of the overall performance in order to make the best possible decision. We have already discussed different ways of capturing and measuring business performance.
  • SaaS applications – these allow you to rent different systems and use only what you need, without investing in hardware and software.
  • Integration of various systems – using virtualisation to run systems with less equipment.
  • Collaboration tools – businesses are becoming more global each day, thus making it more easy and simple to communicate and collaborate with your colleagues all over the world. One example of this is the use of project management software.

Reduce costs but retain talent

An important thing to be aware of is keeping your key employees while trying to reduce costs. Concepts of work are constantly changing in the global business environment and smart leaders know how to respond to these changes. Technology can be an answer here as well, especially when it comes to the mobility of workers. Many companies fear not having their employees in the office because they aren’t sure how to monitor those who work from home or a remote location. However, with a strategic approach and the right tools, IT can be used to improve productivity and in turn, reduce costs.

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About Mary Lim

Mary Lim
Mary has been with GCOMM since 2006 in a sales support role. After becoming Key Account Manager and managing the requirements of approximately 100 businesses, she became Operations Manager. Mary holds a Bachelor’s in Psychology from University of South Australia, a Master's of Information Technology Management with High Distinction from Bond University and a Master's of Communication from Bond University.