Tangible Ways it Can Reduce

¶ … Tangible Ways it Can Reduce Costs

The potential for it to significantly reduce costs can be found throughout the many departments, processes, people, and products within organizations from all industries. There are hundreds of ways it reduces costs, and a sample of the ten tangible ways that it can significantly reduce the costs of any company are defined here:

First, there are the significant cost reductions possible in providing service to customers through the use of it technologies. Take for example customer service for a PC company that needs to provide downloadable software fixes. The use of it saves literally millions of dollars a year in having someone send these software updates out to customers, having them come to the company website is much more cost-effective. The savings in both employee time and costs are significant an tangible.

Second, there are the tangible cost savings of using it to better sell to customers as well. The cost per completing a transaction online is only a small percentage of completing the transaction in a store or over the telephone. Tangible cost savings are evident in online selling and e-commerce across both B2B and B2C-based industries.

Third, tangible cost reductions are seen in the use of electronic alerts and notifications on all types of online accounts (checking, savings, and accounts with websites). The costs to banks of calling customers when there is a specific transaction, or if there is a specific check cleared is very expensive compared to using it to handle all alerts and notifications through the definition of rules that programs use to generate exception reports. The use of Instant Messaging is a form of Alerts as well.

Fourth, the ability to speak with anyone in the world at any time over the Internet is a major tangible cost reduction based on it. This is called Voice over IP (VoIP) and is prevalent throughout many companies, universities and families with relatives overseas. The tangible cost of VoIP has lead to Skype being a new market standard.

Fifth, the use of electronic mail over the cost of sending letters, both from a postage standpoint but also from a time delay perspective is very significant. Cost savings due to electronic mail and the prevalence of its use have made it the most commonly used enterprise application in many companies.

Sixth, there are tangible cost reductions possible by using Software-as-a-Service (SaaS) applications rented over the Internet vs. buying customer relationship management systems and installing them in a company. Significant and tangible cost reductions are possible using Salesforce.com for example over purchasing Oracle Corporations' CRM Suite, or using manually-based systems based on Microsoft Excel or Word.

Seventh, tangible cost reductions are possible by using project management software to manage the many dependencies and deadlines in a project vs. simply tracking all activities in a spreadsheet. Project management software is specifically designed to track deadlines and the resources needed to attain them, and can also load balance resources to attain multiple and often conflicting goals. It greatly reduces tangible costs of both the project and greatly minimizes the risk of a missed deadline as well in this area.

Another tangible area of cost reduction for it is in the managing inventories in a company. This eighth tangible area of cost reduction has to do with the ability to know inventory positions and also track the movement of inventory in and out of a distribution center. In addition, the need for completing a valuation of the inventory, knowing how many inventory turns are completed (how often the inventory turns over is a measure of the efficiency of a distribution center) all contribute to the tangible cost reductions possible.