The impact of digital transformation on cost reduction for businesses
The world has changed enormously in the last two decades— in how we work, travel, and live. I shudder to think about how we managed before the days of Amazon. But, some key things have remained the same, for instance, the desire to have a better tomorrow—thank God for that!
The aspiration to constantly improve our lives has tested our resourcefulness and ingenuity. Now, it nudges us in the direction of disruptive and transformative change.
We all recognise the value of technology in our lives. I, for one, am a big fan of Netflix! Emerging technologies can also help enterprises reimagine their business according to customer needs.
The Shifting Paradigm for Digital Transformation
Recent unforeseen events in the world have dramatically changed the way Digital Transformation (DT) is perceived. What was once a contingency (due to the huge effort involved) is now seen as a necessity (despite current market fluctuations).
DT has an endless number of applications. Think about the ways technology could keep the supply chain on track or allow individuals to access services from anywhere.
Successful DT Use-cases
Adopting DT has had a major transformational effect on many industries.
In healthcare, the combination of AI and robotics has improved patient monitoring and medical device packaging; enabled minimally-invasive surgery and many more healthcare functions. Patients and doctors have also been able to communicate digitally thanks to online healthcare programmes.
Retail is another industry sector that has witnessed a remarkable transformation. When social distance norms were in place, retailers employed big data to measure customer footfall in stores and used computer visuals to make shopping spaces appealing.
Data and AI continue to be adopted to streamline operations and layouts, refine product development and improve the customer experience. They are also used to make educated decisions about inventory management and placement.
Many other industry sectors, including manufacturing, financial services and real estate have shown noteworthy improvements by adopting DT.
DT Enablers for Businesses
A successful DT utilises various technologies, software applications and platforms. Listed below are a few that have helped firms to boost productivity, cut operational costs and enhance overall efficiency:
- The Internet of Things (IoT), a complex network of interconnected gadgets, is expected to reach a $75 billion market by 2025. AI, blockchain, 5G, and edge computing are examples of IoT technologies that aid in the optimisation of various business processes such as inventory, revenue, production, and operations. It is also essential for predictive maintenance and reducing downtime.
- Cloud-based platforms have become the go-to choices for businesses to store resources in and organise their operations in a way that allows easy access to information from a unified interface.
- Automation tools reduce workloads and monotonous chores while increasing productivity through efficient management.
- Inventory management software benefits firms in numerous ways. For one thing, it employs analytics to improve forecasts. This assists in ordering the appropriate quantity of products at the appropriate time. Companies can avoid understocking or overstocking by doing so. Another advantage of these technological solutions is that they can be used to monitor inventory items in real-time, allowing firms to adopt successful First-in-First-Out (FIFO) system strategies and avoid product loss.
- Digital tracking of shipping and logistics reduces the need for staff and allows for more centralised product operations.
- As more businesses adopt the hybrid working model, the use of workforce management tools is becoming increasingly popular. Companies may better use time management tactics to plan and manage projects and employees.
- Collections management software enables firms to keep track of expected payments and delivers a statistical cash projection. This allows companies to handle their cash flow problems and lessen their reliance on high-interest financing alternatives.
The Bottomline: Reduce Costs
If you want to keep your budget under control, technology is without a doubt your most significant asset!
Traditional cost-cutting levers (layoffs, wage reductions, quality compromises) provide only approximately 2% of total savings. Furthermore, it causes additional challenges in the form of retaliation from workers, their families, and larger communities.
On the other hand, good management of digital tools can boost productivity and be a viable alternative to traditional cost-cutting, with cost savings of up to 5%.
Here are a few ways that DT can aid your cost-saving mission:
- In reducing human errors Human errors in accounting, sales & marketing, advertising, and operations cause businesses to incur expensive costs. Such errors can be reduced by up to 90% with DT.
- In minimising machine and personnel downtime Missing deadlines and long turnaround times that prove costly to any business can be eliminated with DT by automating customer service and tech support and enhancing efficiency.
- Providing knowledge that leads to better supplier negotiations Technology can be used to manage a database of suppliers and supply chains, as well as to obtain accurate estimates of purchases and operational costs. This enables the company to better bargain with national and international suppliers.
- In lowering energy expenses Digital technology aids in adhering to maintenance plans and keeping systems and equipment in peak condition. This drastically reduces the company's energy bills.
- In lowering overhead costs Automating HR processes — including recruitment, training, HR administration, etc. — drastically reduces a company's overhead expenditure.
Digital Maturity Drives Business Growth
Digital maturity" is the term used to describe how well a company has adapted to the digital age. One of the many advantages of digital maturity for a firm is the chance to reduce costs.
Digital transformation is the key factor differentiating a merely-existing entity from a thriving giant. There’s no doubt about it!
*For organizations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organizational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organizations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organizations that are innovating collaboratively for the future.