Technology costs can be the secret drain of cash in any business. The slow incremental (or sometimes rapid) rise of technology costs can occur under the radar of even the most vigilant CEO. At Signature Analytics, we recently conducted a technology audit and discovered so opportunities to cut costs and improve efficiency all in one swift change of vendor.
The Ever-Evolving Tech Landscape
There are so many options when it comes to software and technological tools. From Software as a Service (SaaS) solutions to the burgeoning field of Artificial Intelligence (AI), there is an ever-growing list of options. However, these services often come with incentives that make them appear more affordable in the first year or initial agreement, leading to costs that can quickly escalate as time goes on.
When we looked at our own technology expenses, we discovered that we had areas that were easy to trim back such as maintaining more ‘seats’ than needed, and areas where our contracts had jumped in cost upon renewal. We know we’re not alone. This happens to our clients all the time.
Research and Negotiation
An essential step we took was a comprehensive review of our technological assets: which technologies were in use, who was using them, and what value they brought to the company. This process illuminated areas of over-payment and under-utilization, paving the way for cost-cutting measures.
Take some time to research the current market, you may find new platforms that offer greater functionality at a more cost-effective rate than your existing systems. Yes, switching takes time and effort. But it also focuses your teams on their internal processes and for soem software requires a deep dive into data that may have become muddled over time.
Can’t find a better solution? Research offers a benchmark to bring to your current provider to start a renegotiation. By understanding the competitive landscape, you can approach current vendors and negotiate better pricing to get the best value for your investment.
Strategic Cost Evaluation
The key to reducing expenses is strategic trimming not across-the-board cost-cutting. When you understand your numbers, analyze cost trends, and determine the value driven by those expenses it becomes very clear where you’re overpaying and what services you can reduce or eliminate entirely.
When you reduce costs in one area it can officer an opportunity to invest in areas you may have been constrained in. Reduced software costs and better systems might leave room for leadership coaching for middle management or an increased spend in marketing. Or even that outsourced accounting team you always wanted to support your in-house accounting staff!
It’s all about finding ways to increase efficiencies in cost structure and manage your business more effectively.
Technology is an essential aspect of any business, so it is critical to ensure it is providing value proportional to its cost. Regular review, market research, and strategic cost evaluation are vital to keep these expenses in check, ensuring they are both necessary operational costs and strategic investments driving your company forward.