Cost-cutting is inevitable in business. At some point, almost every department in any business will face the need to reduce expenditure while maintaining its functions. This is especially challenging when it comes to IT, where the mix of people, infrastructure, and equipment complicates the matter significantly.
Cost-cutting is never easy, but it’s essential. When done correctly, it will enable your business to weather difficult times. It can even be leveraged into a strategic win, one that leads to greater efficiencies and overall cost-effectiveness. Online Computers will help you navigate such a critical and often sensitive undertaking to ensure that you get the most value out of cost-cutting.
Here are some of the cutback pitfalls we’ll be able to help you avoid:
Getting rid of employees whose tasks are automated
Automation is one of the great boons of the digital age. It allows critical tasks to be completed far more quickly and with less risk of failure. The mistake, however, is in letting go of employees whose tasks have been automated via software systems. Instead, ask yourself what skills these employees possess, and if those skills are not going to generate value for you elsewhere in your business. Tasks that are automatable, after all, are often repetitive tasks, and you may have been underutilizing your employees’ talents. Automation should free these employees up for bigger and better things, instead of just making them redundant.
Ignoring customer feedback
In the hustle to bring costs down, it’s easy to forget that the ultimate goal of your business is to serve your customers. So before you implement any cuts and changes, you need to first gauge your customers’ response to your proposed cutbacks and how these will affect your services. Find a way to consult your clients, such as through beta tests or focus groups, instead of just making unilateral decisions internally.
Spreading cost cuts across the board
“Peanut butter spreading” is one of the most common mistakes when cutting costs. This refers to reducing costs evenly across teams or departments. The reality is, different areas of a business have different expenditure needs to function sufficiently, and they have varying levels of critical importance to a company. First, identify what functions and processes your business absolutely needs to function, and calculate the costs of keeping them up and running. Then prioritize your cost-cutting efforts by targeting the non-essentials first.
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Because most cost-cutting efforts occur in times of crisis, an unfortunate tendency is to focus excessively on immediate needs to the detriment of longer-term plans. It’s critical to always keep the future state of your business in mind when it comes to any kind of decision-making; in the long run, this leads to greater efficiency. For example, eliminating maintenance expenditure for a particular piece of equipment may save money now, but breakdowns or errors caused by lack of proper upkeep will cost your business more overall. Also included are the deprioritization of spending on training and R&D, as well as innovative projects with a lot of upfront costs. Ultimately, spending on each of these is what will lead to growth for your business down the line.
Choosing cost over quality
When keeping to a mandated budget, it’s easy to forget that the objective of cost-cutting isn’t to minimize upfront expenditure but to maximize return-on-investment (ROI). Opting for cheaper, lower quality equipment or services that generate less value for your business will ultimately cost you more. This includes opting for open-source solutions that at times prove less polished and efficient than paid ones, and will thus result in reduced productivity. Ditto for outsourcing processes or products, which are cost-effective in the short term but can lead to excessive complexity and prove difficult to manage in the long run. Instead, look for options that, in your best judgment, will give you the most bang for your buck within the constraints of your budget.
Is your company in need of cutbacks? If your business is in Hanover, Morristown, or Madison, then contact our experts at Online Computers today. We’ll help you turn these cost-cutting measures into tangible benefits for your business.
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