Impact of Digital Transformation on Business Cost Reduction
Digital transformation today is key to creating processes that automate tasks and convert cumbersome work into productive tasks. According to Statista, by 2023, the value of companies that would spend directly on digital transformation would reach a total of US $6.8 trillion.
An effective digital transformation strategy involves attaining digital maturity that leads to a considerable reduction of business costs. A mature digital transformation involves process transformation, adoption of digital tools to automate tasks, accounting software, team and collaboration tools, cloud-data storage, data analytics, software to manage sales, CRM, operations, finances, management etc.
For example, Salesforce — a cloud-based digital transformation software helps in automating marketing tasks, CRM, team collaboration etc. Similarly, ServiceNow — a cloud-based IT service management (ITSM) platform — helps in inventory management, employee IT support, HR service delivery and even application development. Many digital transformation companies also often recommend SAP for automating business management processes. Microsoft also offers a huge range of digital transformation services and platforms such as Skype (for business), MS Teams Office 365 Groups etc.
Digital transformation strategy must keep customers at the center
Customer acquisition and customer delight must drive any digital transformation strategy. A 2019 IDG Study revealed that 63% of the organizations defined success as an excellent customer experience measured by customer satisfaction scores.
Digital maturity equals revenue
A recent survey by Deloitte Insights said that there was a direct connection between financial performance and digital maturity. Deloitte’s latest study emphasized that the digital maturity of an enterprise was directly linked with its net revenue and net profit margin.
Key aspects of digital transformation
An efficient digital transformation strategy involves the following aspects:
1] Centralizing software: Businesses need to have centralized software for the entry of information from each touchpoint, thus saving both time and money.
2] Cloud hosting and migration: Cloud-based systems may save up to 50% of storage costs.
3] Automation tools: Such tools reduce mundane tasks and facilitate better management on a daily basis.
4] IoT for better maintenance: Internet of Things (IoT) and Machine Learning today are transforming businesses today and helping in maximizing profits.
5] Inventory management software: This automates inventory management without investing in personnel, leading to savings.
6] Payments and collections management: Such software reduces day-to-day errors.
7] Sales/leads management: This helps in the management of leads and customer experience. Software such as Salesforce CRM etc helps in not only managing leads but also provide valuable insights about customer behavior.
8] Stationary and administration: Document managers and collaboration tools centralize important information, cutting the cost of stationary substantially.
9] Team management tools: Team collaboration tools such as Slack, Asana, Basecamp etc helping in managing tasks, teams and projects efficiently.
10] Shipping and logistics: Apart from shipping and logistics service companies, many other businesses need logistics software for better management and operations.
How does digital transformation save costs?
Ideally, businesses must aim beyond the obvious digital transformation benefits. However, here are some clear benefits:
# 1 Reducing margins of error: Human errors may cause exorbitant losses which can be reduced by digital transformation by up to 90%.
# 2 Reducing machine and employee downtime
With automation and digitization, you can significantly reduce breakdowns, automate customer care or technical support with the help of a digital transformation agency.
# 3 Better negotiation with suppliers
Supply chain management is another area that can be organized through databases and automation software. This gives businesses better negotiation power with national and international suppliers better.
# 4 Energy costs
Digital technology helps in following maintenance schedules and keeping systems and equipment in optimal conditions.
# 5 Personnel costs
Personnel management can be automated. Things like training, in-house promotions, HR management etc can be automated with digital technology saving costs.
# 6 Increased agility
Digital transformation makes organizations more agile and accelerates innovations, improves delivery of the projects/products and services and brings in better customer satisfaction. A digital transformation agency can help in shedding a lot of load from the in-house personnel making them more efficient.
Today digitally mature companies can engage their customers better. We can help your company smoothly transition through our digital transformation consulting services.