If you’re looking to grow margins, even though I work for a global consulting firm, one of the things I would lean into first is getting your management team’s perspective. A lot of the time, you’ll see that the people within the organisation know where there’s waste or they know where there’s redundancies — they know where they potentially could save money.
The first thing that leaders should do is work with their management team to identify them and lean into the institutional knowledge of their employees, because a lot of times, they have experience working through certain transactions or reviewing certain departments. They know a lot as far as if they needed to reduce or cut cost. They are probably one of the best assets you have as far as generating those ideas or formulating those strategies. Make sure that the questions are asked. You don’t necessarily have to lean into a third party right away, but make sure you’re exploring all those internal ideas first and making sure that they are looked at and identified.
But one of the areas that seems to be ripe for a lot of savings is looking at technology. There are several reasons we think technology does a lot, but usually, technology expenses represent a substantial portion of a company’s budget. Everything from hardware to software purchases to maintenance, contracts, all that stuff costs a lot of money. By scrutinising technology spend, you can identify areas where costs can be more optimised or reduced. A lot of companies have outdated systems or redundant tools.
Looking at the ways to streamline those technology solutions going forward does seem to be very good as far as being able to achieve cost synergies, and then also, look at the different ways you use third-party support for technology. A lot of stuff around vendor contracts, consolidating software licensing, exploring alternative solutions that offer comparable functionality at a lower cost. Looking at technology spend, sometimes you can achieve a lot of those cost-optimisation opportunities.
Everybody’s seeing the rise of cloud computing, and that in itself provides more scalability, more flexibility, and usually has some cost advantages. But look at that, because if you don’t have diligence around that, those management costs around cloud can start to escalate rapidly. Make sure that even though you’ve gone to cloud-based solutions, you’re also looking at the way those costs are being managed.
Everybody has been challenged over the last couple of years around security, around technology, and those costs sometimes haven’t been looked at in-depth as far as rationalisation around security cost. Everybody knows the reputational risk you have around a data breach, but sometimes people have spent just to spend in those areas, and they haven’t done a lot of rationalisation when it comes to data privacy and security.
Those are another couple of areas that if you look at and do some strategies around rationalisation, you can achieve some of the benefits around reducing that overall technology spend.