The purpose of implementing new digital processes is first and foremost to add value to existing workflows with the intent of building revenue. This can be achieved by eliminating sources of overhead without degrading the quality of your products and services, or conversely, by improving the quality or value of your products and services without increasing overhead.
Either way, digitization is the strategic linchpin for businesses that seek to improve their revenue or scale their operations. To illustrate this concept, we've identified several key ways that digital strategies can improve profit margins:
1. Use of 'as-a-service' offerings
Cloud computing is the poster-child of doing more with less. Infrastructure-as-a-service, platform-as-a-service and software-as-a-service in particular eliminate much of the CAPEX otherwise tied to implementing technologies that support new value-add opportunities. This isn't to suggest that on-premises technology has no place in the modern business landscape; but the process of spinning up on-site servers to support new applications - internal or customer-facing - is time-consuming and expensive. Likewise, the amount of risk tied to those large expenditures is more than most SMBs can stomach.
But with cloud services, a manufacturer in the process of extending its multi-channel retailing strategy, for example, can lease compute, storage and database technology from a leading IaaS provider and only pay for what it needs. Azure, for instance, bills by the second for its virtual machines. Businesses still need to carefully estimate their IT capacity requirements, and cost-savings certainly can't offset a poorly planned revenue strategy. However, cloud computing clearly acts as the foundation for SMBs that want to explore new value-add opportunities.
2. Customer engagement and loyalty
Manufacturers, retailers and other organizations in both B2B and B2C markets can engage customers more effectively with digital technology. For starters, a customer relationship manager (CRM) tracks sales activity, order quantities and other revenue-related client interactions. By analyzing this data, businesses can identify up-sell opportunities or complementary products and services with very little leg work. Integration with an automated marketing platform would further simplify the process of engaging those customers to make them aware of said add-on products or services.
Equally important, businesses can use digital technology to find creative methods for enhancing the customer experience and driving loyalty. Personalization is one thing, but giving customers a unique, seamless and convenient experience is a powerful differentiator. An agile manufacturer, for example, can benefit greatly from working with a supplier that provides end-to-end, real-time order visibility along with accurate ETAs. This would require integration between various internal systems as well as a customer-facing application that summarizes order data. However, the contribution to the experience is invaluable.
The bottom line is that it's so much more expensive and time-consuming to attract new customers. Retention should be treated as a priority, because it helps secure future sources of recurring earnings. Highly personalized, well-timed and useful offers for add-on products and services, paired with data-enabled visibility are key ingredients in the recipe for more revenue.
3. Operational efficiency
Workflow inefficiencies are often difficult to spot, especially when different departments or teams are looking at different information. Silos might stem from manual, non-electronic processes. Alternatively, they can be born of poor integration between electronic systems that are already in use, or between legacy resources (e.g., spreadsheets) and new implementations. Either way, lack of a single digital system of records such as a well-integrated enterprise resource planning (ERP) platform make business-wide coordination incredibly difficult and time-consuming. This can result in duplication of efforts, or workflow bottlenecks due to misalignment of capabilities and discrepancies in operational insights.
In other words, countless revenue-improvement opportunities lie hidden within disconnected or incongruous workflows. Naturally, operational efficiency requires a digital unification of sorts, whereby the sources of inefficiency become more apparent through company-wide visibility. Integration is a big part of this, but so is a data analytics platform that leverages existing information to supply decision-makers with insights based on a single source of truth. This leads to the ability to spot where failures occur and then prescribe workflow adjustments that address them without negatively affecting other upstream or downstream processes.
Industry 4.0 is fueled by data-driven efficiencies. Nevertheless, 66 percent of companies worldwide say they lack a clear vision for the digital future, according to PwC. This needs to change. Many of the greatest revenue opportunities (new digital initiatives enabled through the cloud, customer loyalty and operational efficiency) stem directly from well-implemented and expertly executed digital strategies. This may be easier said than done. For assistance, contact ICS Support. We have the expertise and resources needed to help businesses digitize with the end goal of cost-effectively discovering hidden revenue in their existing workflows.