Ways to Improve Your Cost Management Strategy

By Jeb Buddecke, Director of Enterprise Applications at Sphere Partners

Successful businesses thrive on effective, predictable, and reliable processes and people that drive their day-to-day operations. Good management ensures that these operations function despite challenges in human resources, capital, market forces, and other variables. This is where systems optimization comes in. Once you understand the essential business processes in your company, you can determine the best cost management strategy and solutions to streamline your operations, using your people and systems.

Let’s examine why systems optimization matters and how to implement it in your organization today.


Importance of Systems Optimization

Every business utilizes a series of processes to deliver products to customers. These processes can be simple or complex, manual or automated, legacy or agile. Managers need to recognize the gaps or inefficiencies in their internal processes because they appear gradually. Systems optimization ensures you catch inefficiencies early before they hit your bottom line.


Cost Management Techniques

The first step in every cost management strategy is to define your business processes. This means outlining how you process orders, respond to customers, buy materials, nurture leads, and so on. Begin by identifying the following:

  • Your core business functions
  • The most critical processes for each function
  • How each process helps you achieve business goals
  • How each process currently operates 

This analysis will reveal the connections between your business processes, such as what can function independently and what has a ripple effect on other operations. This way, you can document the activities involved in your operating procedures and test their effectiveness. This evaluation should also consider the best way to use your people in conjunction with the systems and processes.


Benefits of Systems Optimization 

An optimized internal system can improve your business operations in the following ways: 

  • Fewer delays and errors in daily business processes 
  • Cost management to utilize resources in the most efficient functions 
  • Tracking resources to minimize wastage 
  • Enhanced collaboration as teams understand their tasks, deliverables, and available resources 
  • Identifying opportunities for employee training to increase efficiency 
  • Improving business policies and procedures that contribute to the company’s vision 
  • Improving data management and compliance for both internal and external functions 
  • Better product quality as teams achieve higher accuracy in their tasks 


Practical Ways to Implement Systems Optimization 

The biggest challenge to systems optimization is that employees often get overwhelmed by the number of steps involved in a process. Even with cost management benefits as an incentive, it takes time to document every step of your operations and identify who does what and how they contribute to your business goals.

So, how do you implement a systems optimization strategy to match your company size, finances, growth goals, and human resources? Here are eight factors to consider: 


1. Systems, Operations, And Personnel 

How does your business run, and what skills, software, and team members are critical to your success? These factors are all intertwined, such that a company that relies on manual data entry will require more time and talent to accomplish tasks than a business that automates data management. Aim for maximum productivity within your available resources. 

2. Optimize & Minimize Systems 

How many internal software systems do your team need to access daily? It’s natural for businesses to add software as they grow, but too many solutions often lead to inefficiency. For example, you may rely on separate systems for CRM, ERP, timekeeping, payroll, and project management. But what does that mean for your accounting, marketing, or IT teams? Today, most Enterprise Applications have overlapping functionality. For example, CRM software has contact and lead management, email marketing, automation features, and more. At the same time, ERP software has automation, accounting, CRM, and HR functions. A systems optimization strategy allows you to keep only the systems that you need to run your business effectively. Audit your systems and eliminate redundancy.

3. Only Buy the Features you Need

Similarly, multiple systems mean that you have overlapping functions that you don’t use while paying for multiple software licenses. Software vendors constantly build new integrations and features, then convince businesses that they’ll need them in the future. Instead of paying for software bundles with excess features, stick with the basic features you require and expand as needed.

4. Task Management 

Who is doing what, with which software, and for what purpose? Every system in your business should contribute to your overall goals, from inventory to communications. Overlapping tasks interfere with efficiency, such as when a warehouse manager records transactions in the general ledger or when an accountant sets sales quotas. Match personnel with the proper tasks. 

5. Outsourcing 

Is it more cost-effective to own your business systems or outsource them to a capable partner? Both options have pros and cons, so choose the route that offers the best cost management for your company. Assess which systems and personnel you need for daily functions versus occasionally, then select a flexible option that suits your business model. 

6. Information Sharing 

Are your teams communicating effectively, or does your internal information live in silos? Businesses with many different departments often have knowledge silos housed in separate systems. Aim to break down these silos and streamline communications across your various teams. 

7. Continuous System Assessment 

Just because your current systems work doesn’t mean they’re delivering optimum performance. This is especially true for businesses with legacy systems. Evaluate your processes and eliminate unnecessary steps or clutter in your operations. Then monitor your results and remain proactive to identify inefficiencies as they arise. 

8. Ask an Expert 

There are always opportunities to improve your cost management strategy, including optimizing your business processes. If you have outdated, redundant, or complex systems, consult a systems optimization expert for help. A consultant can guide you through your optimization process and offer a solution that saves you money in the long run. 


Let Sphere Partners Handle Your Cost Management Strategy

The guidelines above can help businesses of every size and industry to achieve their cost management goals. However, implementing systems optimization takes time, money, and expertise. 

Sphere Partners offers strategic solutions to overcome system challenges, including aligning your processes with your overall business goals. Contact us to learn more about our approach to systems optimization today. 

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