6 min read
August 25, 2022
Cost Takeout at a Glance
The cost takeout is a strategic initiative that can help your company become more efficient. The goal of the initiative is to determine ways to reduce expenses without sacrificing quality, speed or customer satisfaction. A successful cost takeout requires an accurate understanding of where costs arise in your business process and how those costs can be reduced through new technologies. In this guide, we’ll look at some of the most common drivers of costs in IT departments and explain how you can identify them within your own organization’s processes.
Identify Cost Drivers
Cost drivers are the factors that cause your costs to increase. They’re different for every business, but you can identify them by asking yourself: “What makes my costs go up?”
For example, when you buy groceries at the grocery store or walk into a restaurant for dinner, you probably notice that some products are more expensive than others. That’s because some items have higher cost drivers than others.
One last example, if an avocado costs $1 per unit and an apple costs 50 cents per unit (and nothing else has changed), then if one avocado costs $2 instead of $1 then we know that there must be another factor affecting pricing in addition to supply and demand – namely the cost driver associated with avocados has increased from one dollar per unit to two dollars per unit.*
If this sounds like something you and your company are trying tackle – reach out, we’d be happy to help!
Simplify Your Processes
A process is a series of steps you follow to achieve an outcome. It’s how you get from point A to point B in your organization and it can be anything from closing the books on a month, to making sure that customers are happy with their experience at your store.
Processes can be complicated and time-consuming, but they don’t have to be! In fact, many companies have simplified their processes to make them more efficient and effective–and it’s not hard when you know what factors matter most when evaluating whether or not something should be streamlined:
Eliminate Bureaucracy and Waste
Bureaucracy and waste are enemy number one for most businesses, but they’re especially damaging to cost takeout strategies. One of the best ways to deal with bureaucracy is to eliminate it altogether. This can be done through better communication between departments and employees, as well as streamlining processes so that each step only requires the necessary amount of paperwork or documentation.
For example, if you have an employee who needs access to confidential information about your company’s clients (a VP of Sales), it might seem like a good idea to put him through rigorous background checks before granting him access–but this process takes time and money away from other areas that could use those resources more effectively!
Instead of going through such an extensive vetting process every time an employee requests sensitive information related directly or indirectly back up their job function within the company (such as receiving customer data), consider creating short forms which allow them easy access while still maintaining appropriate security measures in place; these simple changes can save everyone involved lots of time while making sure nothing falls through cracks along way.
Automate Repetitive Tasks and Processes
Automating repetitive tasks and processes is a great way to reduce costs. It can also help improve efficiency, quality, speed and customer satisfaction.
Automation is one of the best ways for businesses to save money because it allows them to eliminate unnecessary human involvement in their operations. Once an automated system is set up it requires very little oversight or maintenance–which means fewer employees are needed overall!
Adapt to New Technologies (“Digital Transformation”)
The first step to success is adapting to new technologies.
Digital transformation is the use of technology to improve efficiency and productivity, which can help companies cut costs and increase revenue. For example, many businesses are already using cloud computing services such as Google Apps for Work or Office 365 because they offer better security than traditional on-premise software solutions. Additionally, when you switch from an on-premise solution to a cloud-based one there’s no longer any need for IT staff members who specialize in managing servers–you can just log into your account via any device with internet access!
This isn’t just about switching from one type of software package (like Microsoft Office) over another; it also includes adopting newer technologies such as artificial intelligence (AI) bots that can handle routine customer service tasks like answering basic questions about products/services offered by your organization without having anyone else involved at all!
So, How Do I Implement This Without Sacrificing Quality, Speed or Customer Satisfaction?
You’re probably already familiar with the concept of cost takeout, which is a fancy way of saying “cutting costs.” And you may have heard that cutting costs can be bad for business. But it doesn’t have to be! In fact, improving your company’s efficiency without sacrificing quality, speed or customer satisfaction can be a really good thing for your bottom line–and help you grow.
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