Digitization: 7 Steps To Cost Savings And More Efficiency In Companies

Digitization- It is now common knowledge that a digitized world of work provides economic advantages. Small and medium-sized companies. New technologies have fundamentally changed everyday work processes in recent years. And digitization is advancing at a rapid pace. This forces companies to rethink and keep up. Large corporations can do more easily thanks to their greater financial strength, and broad-based specialist departments often cause significant problems for smaller companies. They quickly lose track of where to start in their structures and what needs to be considered.

The advantages of digitization are ultimately the same for all companies: processes are becoming more efficient and flexible, costs can be reduced and competitiveness increases. So it’s no wonder that the elementary measures are the same in many companies and industries. With these starting points, it is possible to create a reasonable basis for more individual digitization:

Digitization- Determination Of The Current Situation

At the beginning of all measures, there is a comprehensive inventory. Every company that wants to focus (even) more on digitization in the future must first analyze existing processes to identify where the introduction of digital technology makes sense. A systematic approach to individual business areas is essential.

The most fundamental field of investigation in most companies is accounting:

• How much effort does it take to handle receipts and documents in paper form, for example?
• How much time does it take to prepare for tax audits and annual financial statements?
• How awkward is it to contact banks or the tax office?

Comprehensive digitization of these processes towards a paperless office can already save high administrative costs in accounting. For example, because fewer staff are required there, and processing processes become significantly faster.

But internal communication is also a first, relatively easy to explore the field of work:

• Which on-site meetings, which devour time and possibly also travel costs for freelancers, can be held digitally in the future?
• Can high phone bills be averted through online conferences?
• How many workstations does a company have to set up and maintain in its own office?
• How much is a home office possible for employees thanks to digital communication and data provided through a cloud?

Data-driven business with software for orders, online tools for booking appointments or a modern ERP system for managing business data can lead to long-term cost reductions in communication.

With the processing and digitization of elementary operational areas such as administration, maintenance, warehouse and human resources management, unexpected costs can be saved every year. For example, around 40 per cent of previous expenditure costs can be held per year with a digitized purchasing process for the procurement process.

Automate Value Chains

Manufacturing companies, in particular, have a grateful starting point for creating more efficiency and further reducing costs: their value chains. Thanks to modern IT infrastructures, it is relatively easy to achieve enormous progress in the company along the entire production process. Every step can be digitized, from the procurement of the necessary material to the actual production, sales and administration to the supply chain. As a rule, a triad of steps helps to transform value creation in the company:

• Establish controllability: To control inventory management and the supply chain digitally, all products and means of production should be precisely identified in the merchandise management system, for example, employing an individual ID.
• Carry out measurements: The current status of the designated resources must be determined and their processes measured. How good are the product qualities? Are the lead times within the production chain too long? Are there unnecessarily high process costs, for example, due to unnecessary steps?
• Creating synergies: Once the processes have been analyzed, they have to be networked in a meaningful way to increase their efficiency at the crucial points and to optimize their quality overall.

The much-touted Internet of Things, IoT, is now the first choice for monitoring and adapting process automation. With measuring sensors, data storage in a cloud and the implementation of processes via connected software, IoT can make a lot of things easier. As a rule, fewer manual interventions by personnel in the value chain are required, agreements are less necessary, and reaction times to changed market conditions are shorter. In addition, smaller quantities of certain products can be manufactured more frequently at lower costs.

Digitization: Outsource Sub-Processes

The automation and networking of company processes make it increasingly possible to outsource some work processes. This makes it easier to integrate external companies and subcontractors, and the contracting company can focus more on its core competencies to become even more effective there. External production, processing or delivery is often significantly cheaper than if a company had to do it. The digitized communication and monitoring processes make it possible to coordinate a more extensive network of suppliers, producers or service providers simultaneously.

Even digitization itself can be outsourced. Small and medium-sized companies in particular, which have little experience and resources, are usually well-advised to hand over responsibility to software and cloud service providers with the appropriate expertise. This also saves personnel costs since IT experts no longer have to be employed in the company itself.

Increase Customer Loyalty

For companies from industries with an intensive exchange with end customers, it is very worthwhile to focus on digitization in customer communication. A call center, for example, can, of course, also be outsourced, but it should usually be even cheaper for companies to rely on self-service portals for customer service. There, customers can take on administrative tasks for which customer advisors would otherwise be needed. Customers can then manage invoices, make payments, initiate complaints or change personal data online.

In addition, higher-quality company websites with more interactive information for customers and direct contact via social media channels are desirable. The costs for a company homepage can even be written off under certain conditions. This includes expenses for a domain and those for design and programming, as well as for maintenance.

A company presence in various social networks is also a direct means of communication. Both ensure faster service and thus more satisfaction among the people for whom a company ultimately works.

Digitization: Take Employees With You

To maintain the often familiar working atmosphere in small and medium-sized companies, all employees must be actively involved on the way to digitization. On the one hand, this means setting up training courses and advanced training courses for the theory that are specifically tailored to the new processes. On the other hand, what has been learned must be effectively implemented in practice.

First test workplaces are recommended here, which are already tailored to the digitized processes and enable the staff to learn step by step before a complete changeover occurs. This minimizes the risk of a chaotic and jerky rollout, which would lead to additional costs. Well-trained and motivated employees usually pay off more than poorly communicated and hasty digitization.

Note Additional Costs And Environmental Aspects

Even external costs that are not directly related to the actual work processes can be cleverly reduced by a company through more digitization. It is easy to forget that, for example, energy costs can be reduced with modern technologies. Electricity consumption or heating costs in the office can be controlled more easily with smart meters, just like in private homes.

In the meantime, installing such intelligent measuring systems is even legally mandatory for companies with an annual consumption of more than 100,000 kWh. But even with lower consumption, they can already be profitable. Here companies should seek expert advice from energy consultants. In addition, the Federal Environment Agency has developed concepts for companies with which digital environmental management can be promoted in several business areas.

Apply For Government Support

The Federal Ministry for Economic Affairs and Energy (BMW) offers a corresponding funding program to support small and medium-sized companies financially in digitization and promote it. Under the title “Digital now”, companies from all sectors can receive grants and investments for digital technologies and the qualification of their workforce on digital topics if certain conditions are met. The companies are not allowed to have more than 499 employees, and they have to implement the planned measures within twelve months after the grant has been approved.

ALSO READ: Process Optimization Through Retrofitting And Continuous Data Integration