April 13, 2020 - by Richa Kashyap
With the COVID-19 outbreak, business continuity for many organizations has suffered a great deal. Companies, primarily those in manufacturing, agriculture, transport, hospitality, energy, and retail, have been impacted by unplanned/immediate revenue loss. These sectors have been experiencing colossal losses in revenue, and their primary need is cost reduction due to lost revenues. At the same time, companies in the medical, government, and financial services industries providing essential services in the times of the crisis are also experiencing increased costs due to higher operational demands. Irrespective of the industry you belong to, optimizing costs to survive and thrive is a pressing issue in the current scenario. Learn how elastic services, such as cloud and managed services, can drive cost optimization while ensuring your business operations don’t suffer.
Companies in which the impact of COVID-19 has been extremely far-reaching have a lot at stake. In the absence of a robust strategy or plan to deal with the crisis, they are bound to experience 1) drastic changes in customer behavior and attitudes, 2) a decline in revenue, as well as 3) disruption in operations and business continuity. To avoid facing these challenges, companies will have to make adjustments in spending, such as shift marketing spend to optimize demand, stabilize operations to ensure the security of supply, and plan for immediate cost takeout to conserve cash.
On the other hand, for companies providing essential services, cost optimization has more to do with scaling costs appropriately for meeting increased demand in products and services. With the increase in the number of infected people, such companies are facing higher operational demands. At the same time, employees in frontline services are asking for higher compensation and assistance from their employers.
With companies across sectors facing uncontrollable losses and with essential services companies experiencing fatigue due to the increased demand, the message is clear: cost optimization measures must be taken immediately. This situation means essential services companies will have to drive more efforts towards IT Strategy and Planning and less towards immediate cost reduction – to understand the appropriate expenditure needed to scale demand/revenue.
At the same time, all other sectors will have to kickstart their cost optimization efforts instantly or face the risk of irreparable losses, including a dramatic impact on the balance sheet with a multi-year effect on the bottom line. Such companies might witness uncontrollable operational disruptions with certain business units no longer offering positive operating margins. A vicious circle will most likely begin, and to tackle these challenges, companies will have to take more aggressive cost reduction measures to combat significant revenue declines. These measures may include employing aggressive promotional strategies and temporarily shutting locations or suspending operations to contain costs.
As COVID-19 continues to impact human life and enterprise health, companies have no choice but to stabilize operations to the new normal. In doing so, they may experience rising costs in some areas, such as telecommuting expenditure or digital workspace spend; they may also need to reduce certain IT infrastructure costs because of a lowered demand for products and services requiring IT.
Elastic services can help overcome the challenges organizations are facing today. Both Cloud and Managed Services can enable companies scale their IT infrastructure and services up and down rapidly and keep themselves aligned with the unpredictable demand. Since most enterprises will freeze hiring and shy away from long term capital investments, they can meet their requirements to the T with Cloud IaaS and Managed Services instead. By using elastic services, businesses can cut down on unnecessary operations, pay only for the services and resources they use, improve organizational efficiency, and strengthen their business continuity posture. They can also implement and make the most of a digital workspace and enable employees to deliver value – even as they work remotely from their homes.
Synoptek has a strong track record in enabling companies to fight calamities and emerge winners. As a Managed Services Provider, we can help you optimize your costs and make it easier for you to cope with the current challenges. Our three-step approach to cost optimization includes:
Given the pace and scale of COVID-19, traditional wait-and-watch responses to fighting the pandemic won’t work this time. Since there is a high likelihood of substantial revenue disruption, which might also result in a liquidity crisis for many, bouncing back to normal is not going to be easy. What companies need is to first safeguard the health of their employees and then take necessary steps in understanding their current challenges, devising strategies to earn back customer trust and loyalty, stabilizing operations, and optimizing costs.
Partner with Synoptek today to optimize costs with elastic services and be prepared for an uncertain future.