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4 areas you should cut costs on immediately

4 areas you should cut costs on immediately

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Given that slashing budgets with a blunt instrument didn’t work in 2020, it is likely to also not work in 2023. But don’t bury your head in the sand, says Forrester as it predicts that 2023 budget pressure will be intense, and blindly planning for modest spending increases across the board will backfire.

“To come out on top, you’ll need more discipline and precision to prioritise investments, trim waste intentionally, and place smart and bold investment bet,” it added. So what should your next move be ahead of this planning season?

Well in this article, we’ve got a guide on where you can move your money from.

1. Low-quality data and innovation outsourcing

External partners will continue to play an important role in your growth, but two key areas are ripe for deep cuts. First, the quality of third-party data continues to drop as regulators and tech companies such as Apple aim to tamp down on unchecked data sharing, so streamline your third-party data partnerships to only those that add value to customer relationships and offer a future-proof solution.

Second, many firms have relied too heavily on partners for digital innovation — especially during the pandemic-induced digital sprint. Consider bringing more innovation in-house to solve two problems at once: freeing up budget and providing a creative outlet that will help retain talent.

2. Underperforming markets and customers

While it seems obvious, leaders often continue their old habits and miss opportunities to assess and document markets, areas and products that they should exit — as well as activities that they should modify or drop. Use this moment to reallocate resources toward high-potential customers and market segments.

However, don’t completely ignore buyers in those segments negatively impacted by economic challenges. Instead, implement lower-cost nurture programs. These will reduce your current costs yet still position your organisation to be first in line when these organisations recover and are ready to spend again.

3. Bloated software contracts

Economic uncertainty is destabilising some software markets as established firms struggle to live up to their valuations and new entrants struggle to survive. Use this moment to renegotiate prices (including pushing for consumption based pricing), optimise terms, and consolidate contracts. Contracts with core enterprise apps likely get regular scrutiny, but don’t overlook agreements with point solutions, such as voice of the customer.

These offer potential savings by consolidating department specific contracts. Be pragmatic about who needs a license, and scale back seat-based spending to employees who really use it.

4. Technical debt

Many thought cloud would be the antidote to technical debt. But yesterday’s lifted-and-shifted workloads are now debt themselves, given how inefficient to operate and difficult to upgrade they are — especially compared to cloud-native options. Plus, even the smallest bit of inadequate governance, misdirected investments, poor coordination, and failure to manage change increase technical debt.

Forrester’s 2022 data shows that business and technology professionals with future fit tech strategies are more than two times more likely than others to view upgrading, refreshing, or consolidating business apps, hardware, and software infrastructure as critical. In 2023, minimise legacy investments and duplicative or underutilised tools across your entire tech stack as an intentional part of your planning.

And yes, consider early cloud deployments as candidates for technical debt reduction.

Related articles:
Study: Budget uncertainty forces marketers to focus on micro-influencers
Study: More brands spend over 30% of budget on influencer marketing
What are the most cost-effective solutions for mobile marketers?

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