Driving Costs out with Digital Transformation

If you turn on your TV for more than five minutes these days, you can’t help seeing those great commercials with dramatic music, shimmering lights, and suave spokespeople making sweeping pronouncements about a future made brighter by digital transformation (DT). Those commercials make for amusing viewing, but they don’t provide much in the way of anything but teasers on DT.

One reason might be because DT is such a vast concept—and still somewhat nebulously defined—that it’s hard to fit an adequate description into a 30-second spot crammed between car and golf ball commercials. However, there’s one area of agreement between almost all experts and pundits who tout the virtues of DT: it has enormous potential to drive costs out of your business.

There are three ways DT can help you transform your organization and drive costs out:

  1. Streamlining your IT infrastructure to gain the benefits of technologies such as AI
  2. Automating activities and processes to and free up human resources to concentrate on analysis and value-generating activities
  3. Using AI to become proactive by predicting and mitigating problems before they manifest

Streamline your IT Infrastructure and development processes

The infrastructure and computing power needed to make sense of the deluge of data you face is a rapid drain on resources. You can digitally transform, and streamline, that infrastructure. The cloud is your best option here. Cloud deployments—especially managed-service, intelligent cloud models—enable you to spin up or down when you need to, accessing the storage and analytics resources you need, when you need them.

And you only pay for what you need, so even though you’ll have access to cutting-edge computing technologies, you’ll spread the cost over the value and won’t incur up-front costs that may not ever deliver a return. You can gin up multiple models, try them out, learn, discard them, and move on—without incurring catastrophic costs. What’s more, the costs are not only reduced, they’re transferred from CapEx to OpEx, which improves your bottom line.

Automate repetitive activities and systems

It’s an ugly truth, but people cost money. However, by leveraging digital technologies such as AI and machine learning, you can automate many labor-intensive processes that are currently performed by humans and free those humans up to add their tremendous intellectual value to your workstream.

Customer service is ripe for automation—think chat bots that many banks and retailers are now employing as first-level problem solvers. But there’s so much more. Robotic process automation will revolutionize the back office by automating such diverse processes as invoice processing and sales support. They’ll also transform tech support functions in finance, HR, marketing, sales, etc.

Digital supply networks will also revolutionize the traditional supply chain. There’s almost no limit to automation-ripe functions. Each automation drives costs out of the equation and lets your people contribute their intellectual capital rather than their manual labor.

Become proactive

We’ve all seen those funny commercials on TV where the elevator talks and lets the maintenance guy know there will soon be a problem. It’s amusing, but it’s a simplified version of actual capabilities that are available to help you transform from a reactive organization to a proactive powerhouse that can predict problems before they happen and make plans to solve or mitigate them.

GE pioneered one form of this transformative technology with the concept of digital twinning, where they put sensors in their engine parts and, over time collected and analyzed performance data to enable them to predict how, and when, engines would fail. They created digital engine models (twins) and, based on those models’ performance, were able to create more effective maintenance schedules and significantly reduce costly unanticipated failures.

What wouldn’t you give to know when your products and processes would fail or fall behind, and how? How much could you save if you could develop maintenance schedules for your production equipment based on solid predictive numbers rather than someone else’s set schedule? If you could devise better sales strategies based on more accurate predictions of market conditions and customer behavior? Enough to make it well worth the investment in technologies, such as machine learning, that enable you to make those kinds of predictions.

It’s always the bottom line

These are only a few of the ways to leverage the power of digital transformation to drive costs out of your company. As many activities as your organization engages in, there’s a digital technology to help transform each of those into a more efficient, effective process. As you become more efficient, your costs decrease, and your productivity and margins increase. And that’s what it’s about—increasing those margins to grow your bottom line and shareholder value for long-term success.

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