Become indispensable to clients by helping them control costs

In the current business environment, controlling the total cost of ownership or TCO of a new technology investment is high on the agenda of most business leaders.

This is especially true for companies that rely on hardware and/or software-based systems to deliver commercial products and services to their end-clients.

However, given the increasingly complex and disruptive nature of technology today, this is becoming a complicated and difficult task. Technology suppliers that can help their clients manage costs are well-placed to become indispensable to the success of their clients.

In a recent study we conducted for a leading business networking device vendor, we examined the practices used by leading European communication service providers across five countries, for managing the TCO of the services (e.g. Internet connectivity, enterprise communications and other managed business applications) that they deliver to their end-customers.

Taking hold of TCO is difficult in practice

While identifying and measuring services TCO in order to better manage it is key an objective for many communication service providers, in practice most end up only focusing on certain discrete costs, with little consideration for others or for the interactions between them.

This less than ideal situation arises from two main types of difficulties:

• Agreeing on a common and practical definition of TCO; one which can be easily measured
• Aligning diverse and complex organizations in order to uncover the required information, across all parts of a service offer

Technology companies adopt diverse measures to manage their discrete costs

With such real barriers holding back effective TCO management, most service providers refocus their practical efforts on identifying, analyzing and managing the discrete costs areas related to the more easily identifiable parts of their service delivery chain.

The cost reduction practises currently used by the service providers we interviewed fell into four broad domains:

• Commercial / financial – e.g. Substituting technology maintenance contracts with additional investment in networking hardware devices
• Organizational – e.g. Improving device stock management to reduce warehouse space and related costs
• Operational – e.g. Using standards-based equipment to lower staff training, installation and other operating costs
• Customer-experience – e.g. Deploying high-quality devices to reduce customer complaints, while lowering repair and replacement costs

While technology is an essential part for delivering many of the latest offers to consumers and businesses alike, its cost impact goes far beyond the purchase price or the direct features included in a device or system.

Technology suppliers can become indispensable by helping their clients manage their costs

In today’s environment, the success of any technology provider hinges not only on bringing to market innovative and cutting-edge technology, but also on ensuring that it can address the broader cost concerns – in commercial/financial, organizational, operational and customer experience-related areas – of its clients and of their end-users.

For technology suppliers this implies:

1. Acquiring a deeper understanding of the end-to-end product or service delivery chain, and of the associated cost issues
2. Establishing a more collaborative working model with clients and end-users to jointly uncover new insights and explore innovative cost-driven solutions
3. Jointly developing and testing new product and service solutions that help manage costs across all parts of the service delivery chain

By increasingly broadening their horizons and efforts to address the wider cost issues and the real impact they have on their clients’ business, today’s technology suppliers can become more relevant and indispensable to their corporate clients.

Tags: Cost control, Cost management, Innovation, Total Cost of Ownership