How to Uncover Digital Transformation Cost Savings

February 15, 2021 - by Synoptek

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Between 2020 and 2023, investments into digital transformation are projected to reach a total of $6.8 trillion. There is no doubt about the operational efficiencies and business agility that digital transformation brings about. But what organizations don’t often realize is the magnitude of costs they incur when they do not enable transformation: outdated technology not only restricts businesses from keeping pace with the pace of disruption, it also adds to several costs across maintenance, support, integration, upgrades, and costs of innovation. No matter how critical digital transformation cost savings are to an organization’s long-term growth and agility, they are also difficult to achieve. Read on to learn how you can lower IT costs through digital transformation.

An Outdated Strategy is Costing Your Organization

Most organizations today rely on their IT infrastructure to run their business: right from building new products to safeguarding financial data, offering unmatched customer service experiences, unearthing market trends, optimizing inventory, and strengthening security – among others. Given how significant a role IT plays in day-to-day functioning, the costs of an outdated strategy are massive:

  • Ownership Costs: Bulky on-premises systems not only demand massive upfront investment, they also cause organizations to pay excessive administrative costs
  • Maintenance Costs: Outdated processes greatly impact operational efficiency, compelling organizations to spend on supporting and maintaining their legacy systems
  • Security Costs: Since monolithic systems offer little or no protection, the chances and corresponding costs of security incidents increase greatly
  • Integration Costs: Proprietary systems and applications are poorly integrated, causing organizations to spend on modern tools and plugins to enable integration
  • Competition Costs: Despite experiencing growth, organizations fail to deliver competitive benefits and outcomes due to the presence of outdated projects, processes, and systems
  • Employee Dissatisfaction Costs: Aging infrastructure not only lack agility and flexibility, but they also impact employee productivity and business profitability
  • Customer Churn Costs: Obsolete technology also causes a lot of customer frustration that often ends up in high customer churn

Digital Transformation can Ensure Lower Spend

In today’s highly dynamic business environment, cost reduction is no longer an option, but a necessity to deliver high-quality products and services and outdo competition. Digital transformation, when done right, can allow businesses to drive growth, adapt to new markets, and lower spend. By cutting unnecessary technology expenses, it can help in:

  • Faster Time-to-Market: Because decision-makers get a real-time and enterprise-wide view of business operations, they can make quicker and better decisions. Such strategic, data-driven decision-making can help accelerate time-to-market as well as time-to-value – allowing organizations to increase profitability, garner larger sales figures, as well as improve market share.
  • Optimized Processes: An updated digital transformation strategy enables organizations to scrap any system or process that does not contribute to the organization’s goals and vision. Such elimination can help in optimizing processes as well as reducing the time, effort, and costs spent on unnecessary administrative tasks – such as managing and maintaining legacy systems.
  • Enhanced Automation: Given how important it is for organizations to respond to market changes with agility, digital transformation paves the way for end-to-end automation. Automation can help in eliminating the costs of human error as well as in bringing the organization up to speed with current trends and disruptions.
  • Improved Visibility: Since digital transformation enables the integration of different systems, it helps in bridging silos that exist between dispersed teams and departments. Because all data and information is clearly visible through a single pane of glass, organizations can better assess their operations, identify risks, as well as enable improvisations.
  • Better Customer Experiences: The right approach to digital transformation can also allow organizations to deliver better customer experiences. By constantly gathering and analyzing customer data across preferences, buying behavior, and recent online history, they can offer personalized products, offers, and discounts, and better meet the fluctuating needs of customers.

How to Build a Cost-effective Approach

For digital transformation to drive the expected operational and cost efficiencies, it is critical for organizations to take a cost-effective approach to digital transformation. Here are some tips:

  • Carefully assess your existing IT ecosystem to identify low-performing systems and operations and discover opportunities to enhance their performance
  • Always have the support of your leadership; their backing can not only bring in the investments needed for successful digital transformation but also provide advice and guidance needed along the journey
  • As far as possible, modernize your legacy systems: re-architect, re-factor, or re-host them and bring them up to speed with today’s world
  • Although short-term IT initiatives are important, make sure to always tie them with the long-term vision of your business
  • Implement modern technology; but don’t go overboard. Always assess the capabilities of new technology and see how they fit in your IT ecosystem
  • Embrace automation to reduce the reliance on manual efforts and improve quality and speed of your business workflows
  • No matter what technology you adopt, map it to your customer journey. Assess how you can use technology to enhance customer experience across every touchpoint
  • Lastly, don’t look at digital transformation as a one-time activity. Focus on continuous improvement and optimization of your IT infrastructure for sustainable growth

Reinvent Your Business

Organizations that function on legacy infrastructure lose a lot of money due to aging infrastructure and outdated processes. The only way for them to avoid these costs is by embarking on the digital transformation journey. The right approach to digital transformation can pave the way for several long-term and continuous business benefits. Although transformation does demand investment in modern technology, it also delivers several cost advantages. Devise a cost-effective strategy today to accelerate your transformation efforts, reshape your IT infrastructure, and reinvent your business.