Optimize Efficiencies to Save the Most Money

When applied to a well-oiled machine, automation only increases output. This is the cardinal law of business technology. The second is that "inefficient operations were made even less efficient by the introduction of automation."

W. M. Gates

Greetings, Pals

It's now 2003. Our thoughts and actions are constantly accompanied by fresh ideas, plans, and expectations for the future. As a result of the stagnant economy, many businesses are focusing on streamlining their operations in order to save money.

We've seen in the last two newsletters how client retention can dramatically cut costs while simultaneously increasing income. Studies have shown that the cost of acquiring a new customer is anywhere from five to ten times that of keeping an existing one.

If you can also be the lowest-cost producer in your business, you'll see growth both when the economy is doing well and when times are tough.

Profits can be greatly increased by cutting expenses during prosperous times. And even when business is slow, you continue to profit while your less-efficient rivals suffer under the weight of rising cost constraints.

Compare the recently bankrupt United Airlines to Southwest Airlines, which has been profitable for nearly 30 consecutive years. Here is how much each one costs, as reported by Jeff Mayer's "Succeeding in Business" Newsletter (subscribe at http://www.SucceedingInBusiness.com).

Price Per Mile of Seat Availability
UA Southwest United
$11.00 $7.38
Time and Material Price per Mile of Seating
UA Southwest United
$4.60 $2.90

There is a noticeable difference in the flying experience between the two, I'll give you that. I much prefer pre-assigned seating and the option to arrive at the airport an hour before my flight. But would I ever pay United's extortionate price for a flight that was otherwise identical? No way! You wouldn't either, and that's why United went bankrupt while Southwest, despite its low-cost model, has dominated the airline business year after year.

Ten years ago, it was possible for a company to become dominant in its field by focusing on providing exceptional service to affluent clients. A competitor in the same market could decide to focus on becoming a low-cost producer in order to corner that market. Companies in the modern day know they need to excel in both customer service and cheap production costs to succeed. CEOs, CFOs, CIOs, and operations managers now face new problems in connecting strategy, productivity, and competitive advantage in the face of this reality.

These objectives can be helped along by two novel and underused ways to boost productivity. The first step is to integrate technology and business goals by looking for investments that would yield a positive return on investment (ROI) in less than a year. According to an article by Donald Laurie published in Financial Executive International in October 2002,

For more on how to increase productivity, check out Laurie's latest: "Linking technology strategy to corporate strategy is central." Wal-Mart is aware that it needs to be both an industry leader in customer service and a low-cost producer to succeed. It employs a holistic approach to business and technology. K-Mart Corp. filed for Chapter 11 bankruptcy the same month that Wal-Mart overtook it in U.S. sales. Wal-Mart smashed K-Mart with pricing power thanks to a 13 percent SG&A (selling, general, and administrative) advantage it acquired through integrating business and technology initiatives.

Technology strategy... helped Dell Computer Corp. obtain an overwhelming competitive advantage over rivals like Hewlett-Packard Co., Compaq Computer Corp., and others and support its "go-to-market" and production strategies.

A few things I'd like to elaborate on:

1. Aligning business and technology goals is crucial to increasing output.

Keep in mind that the foundation is the company's overall strategy. The establishment of a business strategy is the first step toward the development of streamlined procedures that will be used to put that strategy into action. If you want to find innovative ways to save money and increase internal efficiency, investing in the right technology is essential. When used correctly, customer relationship management (CRM) and enterprise resource planning (ERP) systems can dramatically improve productivity and open up a world of new opportunities.

Initium Technology is an expert at defining business objectives and coordinating corporate strategy with the best available technology. Our customers benefit from these savings and efficiencies as a result. Please contact us at 1-800-250-5732 or [email protected] for further information.

2. LOOK FOR VENTURES THAT BOOST PRODUCTIVITY AND REDUCE COSTS AND RESULT IN A YEAR OR LESS RETURN ON INVESTMENT OR ROI

Today's businesses need digital solutions that can generate a return on investment in a year or less to survive. These businesses can acquire a competitive edge and lay the groundwork for their future success by implementing digital solutions that will produce tangible results in a year or less. Once the infrastructure is in place and the costs are covered, improvements in business intelligence and analytics provide better insight into the company's clientele. More efficient interactions and transactions are made possible by increased cooperation between internal departments and customers.

In the first year after implementing SalesLogix, we witnessed a complete return on our investment. According to Doug Levin of Prophet21, that investment is currently yielding a tenfold return after only three or four years. Download "Fast ROI in Mid-Market Customer Relationship Management Solutions" from http://www.initiumtech.com/downloads.htm to learn more about the return on investment and cost reductions realized by various firms thanks to SalesLogix.

Implementing a customer relationship management system can reduce expenses in a number of ways. Benefit #1: Fewer keystrokes, one centralized customer database Second, the automation of mundane, repetitive operations allows regular business processes to be completed in less time. 3. Faster access to vital data with enhanced visibility into the sales pipeline and other analytic metrics 4. Better data quality leads to higher response rates for marketing campaigns. Calls to customer service and technical support have decreased as a result of improved, real-time access to information and a larger, more comprehensive knowledge base. Leading configuration technology that is seamlessly linked into front- and back-end systems reduces the need for direct support for individualized product sales.

Are your production costs among the lowest of your competitors?

Do people at your company still rely on things like phone calls, emails, spreadsheets, and word documents to get their work done?

What percentage of your typical procedures have you automated?

How many hours a week do your workers waste repeating last week's tasks?

Is there a digital dashboard available to managers and executives that shows them the analytics they need to make crucial decisions in real time?