How to choose a software solution and optimize the cost of sales and your revenue
6 min read by Nichita Herpuț
published 2 years ago, updated 2 years ago
To efficiently optimize and find the right tech solution, first you need to understand how IT costs work in businesses. These have multiple forms and the package is different for every company. During 2020 we have all learned how important tech is for every business. As we advance software and robots become a regular part of our lives.
What is the impact on my profit margin?
If you choose the right tech solution, the impact can be outrageously positive. Of course this is no easy task. But a good start is to lay down all the processes that your business has, and from the bottom up start searching for solutions for your most time consuming tasks, even for the ones like price quoting — if you still use Excel/Spreadsheets to create them make sure to search for a quoting software like OptiOffer.
There are however limitations when it comes to tech solutions. The most obvious and important is human connection/interaction.
As an example think about a sales agent, the biggest asset that he or she has is time.
If sales agents can have more time for human interaction they will most definitely sell more, right?
Well, yes, the performance of this sales agent is based on this key factor. Having more time to talk and interact with clients will in the end bring more revenue to the table. And if more time doesn’t result in more sales then al least you know you have a problem somewhere — which is also valuable information.
How to choose the right tech solution in my business?
When it comes to finding the perfect fit you must take into consideration at least the following:
- monthly/yearly fee - usually SaaS
- 1 time fee + regular maintenance - usually On-Premise
- Integrations that the system has with another
- Your sales and business processes
- Your customer expectations
- Your expectations
If you cleared all of the above, you can start choosing the right tech solution. Integration and set-up/onboarding is different and depends on the software all of them have +’s and -’s so read carefully below and see if anything is a dealbreaker for you.
- Easy set-up, maintenance is done from a distance
- If it is web based it does not require a specific operating system to work
- If you need to install the software, check with the provider exactly what Os’s it can work with
- Sometimes it is not the “perfect” fit
- Usual payment method: monthly/yearly subscription/user
- Extra costs might include: more users or access to different features or in-app purchases
- All of your data are stored on the providers servers — check what kind of data security they offer
- Set-up requires hardware and infrastructure such as servers, network switches, etc.
- Choosing a provider that is far away can cause a lot of headaches and extra transport costs
- Every phone, laptop or computer needs to have this system installed manually
- These are very broad solutions with endless amount of modules and configurations
- Usual payment method: upfront consultation, hardware, licenses and set-up
- Extra costs might include: monthly/on call maintenance fee and setup of new company hardware
- All your data are stored on the servers that are installed in your offices
Please note that when calculating costs for on-premise solution include the following
- Energy consumption
- The usual time after the server hardware goes out of date
- Extra hard drives, in case 1 breaks you can easily and rapidly change it
- Do I want constant security updates for the system?
- Is your network infrastructure ready to host this system?
Are SaaS/On-Premise solutions scalable?
One of the strongest points of SaaS vs On-Premise is that On-Premise system are slow, hard and expensive to scale. While SaaS solutions require you to purchase more users or a different subscription plan and Voila, you can hire new people without the fear of installing and purchasing new servers and software licenses.
Types of tech related costs
IT Employees costs (direct)
This is very simple to calculate. How many IT employees including management are involved in this Department - sum everyones salary together and there you go.
However, if you are a smaller business then simply split the ratio of the roles (50% IT and 50% other) and then add the correct amount to the cost.
The IT department is strictly tied to your business decisions, path and almost always require a management approval to make changes. See how much time is needed to manage these resources. It is important to know how fast can you integrate and actually start using a software solution and how much support it needs in order to run properly.
Moreover, usually business SaaS solutions are made for owners that want to grow with as less employees as possible, with little to no mistakes and so on. It doesn’t really matter if you are managing a traditional company or not. There are solutions for every business needs and type.
3rd Party contracts
I am absolutely sure that you have been approached at least once by a IT Development/Services company. Well, there are companies that can manage all your digital requirements.
Some of the services include:
- Local IT infrastructure management and setup like laptops or printers
- Website and Social media
- Custom software development
- Basically anything related to the digital world
Hardware, Software, Licenses and Subscriptions
Every business requires at least 2 of these in order to function properly.
Some software solutions require big, expensive and energy consuming server hardware and tens of hours of paid installation and months of implementation. The on-premise software solutions fit into this category. Moreover, these systems require constant IT support — either in-house or a 3rd party to function properly.
SME’s will definitely not be able to pay such services without making compromises.
Thanks to the evolution of cloud solutions and SaaS (Software as a Service), this however is no longer an issue.
SaaS companies simplify the payment and bundle licensing, constant development and support together into a single monthly or yearly subscription. SaaS usually try give 10x in return.
Also, these cloud service also promote trial periods or free access to limited features in order for executives or teams to easily create an account, log-in, test, evaluate and see the value for themselves without the need of in-house IT intervention or infrastructure.
Basically your business tool that makes you money is as simple to use as Netflix or Facebook.
P.S. try searching for Web based software so you do not need to worry if your a MacOs user and your sales colleague is a Windows or Linux fan.
Choosing the right tech solution to optimize costs of sale is no easy task, either if you are doing it to lower your selling price without compromising profits or just for generating extra profits it all depends on your persistence and expectations.
Our recommendation is to go for SaaS solutions as most of the times, a small issue can bring the highest profit.
A quick example
If you are a quoting intensive business, in order to make a sale you have to send a quote/offer to every customer. Then the biggest difference will make when your sales agents are able to create quotes and offers quickly, without mistakes in a professional, transparent matter. In the end, they can focus on closing the deal not generating the quote.
This is exactly what OptiOffer is about, helping you or your agents sell quickly, close more deals and let you monitor and check exactly what the performance was.
If you are in searching for a partner to help you create a new strategy or model your business in order to increase revenue or you just need to find money for your idea Thrivelab is here to help you!
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