Top cost optimization strategies you should know of
Cost optimization is a perennial challenge for businesses and enterprises. Organizations are always on the hunt to reduce costs to eventually ensure higher returns. According to the Gartner glossary, cost optimization is defined as, “a business-focused, continuous discipline to drive spending and cost reduction while maximizing business value.” Usually, it includes:
- getting the best pricing under favorable terms for all the purchases that a company makes throughout the year,
- automating and digitizing wherever necessary,
- simplifying, rationalizing platforms, processes, applications, and services.
As we’re just a few months away from the beginning of a new year, for any business transaction, obtaining the best pricing and terms is a must. There is no better time than now to standardize, simplify, and rationalize processes and services. This is a great opportunity for you to examine investments, identify cost-cutting options, and revisit your strategy to generate the best value.
With this goal in mind, take a look at a few of the best cost optimization strategies.
Outsource lead generationA steady supply of quality leads is necessary for any company’s survival. However, in-house lead generation can be cumbersome and expensive, so outsourcing it only makes fiscal sense. In fact, outsourcing offers a 43% increase in leads when compared to in-house lead generation efforts, which means you get more for the amount that you spend. Also, by delegating lead generation to specialist agencies, whose core competency it is to generate leads, you can also accrue savings with regards to time and effort in addition to monetary savings. You don’t have to invest in this area at all, and in fact can adopt an omnichannel approach to target audiences on various platforms. When you take on such a task internally, however, it can turn into an expensive undertaking that adds to your expense sheet. The best part is that when you choose an experienced agency such as Resolute B2B, you can optimize costs further. How? It’s because our team optimizes your lead generation budget, ensuring that you get the best returns for your investment and a shorter sales cycle too.
Achieve IT cost optimizationIT spends are typically not only the highest, but also the least differentiating. This is irrespective of an organization’s size. Some businesses also tend to over-invest in technology and techniques because they are new, popular, and cutting-edge. However, the goal of any investment is to make money, and you want to be sure that your IT infrastructure is providing you with value that matches your investment. Otherwise, minimize excesses. One thing to keep in mind is that people, processes, and technology are interdependent. Simply replacing technology with people or vice versa is not helpful. A thorough analysis and continuous monitoring is the most profitable approach.
Simplify and consolidate infrastructureStandardization and consolidation have a critical role to play when it comes to cost optimization. So, start by analyzing the cost and time spent to complete certain critical tasks. Then, check whether advanced solutions can do the same amount of work faster and more efficiently. If you find that this is the case, take up infrastructure upgrades immediately. Also ensure that you have people to handle new platforms efficiently, or else the changes will be of no use. Simultaneously, simplifying multifunction security appliances and hyperconverged infrastructure, for instance, will help to better threat management and also improve computing and storage capacities.
Evaluate cloud servicesCloud cost optimization is the effort to reduce spending by identifying mismanaged resources and sizing computing services appropriately. With most cloud services offering user-based subscriptions, you always have the option to take more slots and scale as and when you need to. In the meantime, you can identify and address unused and idle resources.
Manage your supply chainIt is a known fact that logistics influence a product’s price, and therefore managing the supply chain is critical, especially in light of the pandemic. Ideal supply chain optimization ensures that raw material is sourced at the best price, is shipped optimally to a processing plant, and then the final product is sent to appropriate distribution centers for efficient delivery to customers.
Optimize product costsThe current manufacturing landscape is facing numerous challenges. Globalization, technological advancement, economic crunch, global warming, and COVID-19 top the list. Product cost optimization takes into consideration all these variables and offers a sustainable solution. In fact, the solution gives you a ‘should cost’ to compare the actual price with, and also identifies maximization opportunities.
Improve energy efficiencyFossil fuels are steadily depleting. Add environmental stressors and degradation to this list and you’ll find that such factors are pushing more and more organizations towards renewable energy sources. They reduce energy costs, increase reliability and also boost fuel efficiency. The transition to energy-efficient solutions is likely to be costly initially, but is bound to give you good returns in the long run.
Review maintenance contracts
You must pay attention to maintenance contracts and review them before renewing. While this may seem like a no-brainer, auto-renewing can significantly up your expenditure. So, re-evaluate the necessity of each service and renew only what you need to, after negotiating the best possible terms. In today’s day and age, with on-demand services and unlimited scalability, it’s a wastage of resources if you hold on to more than what you need.
Cost optimization contributes to strategic planning, helps cut down wastage, and ultimately makes for a healthier bottom line. By implementing these simple steps you can run a tight ship and maximize business potential.