The Major Impact of Business Digital Transformation on Cost Reduction

digital transformation

The digital transformation within a business impacts pretty much every single aspect of that business—from how a business recruits and employs, to how it sells and communicates with clients and customers.

One key area of business digital transformation that is having to move quickly is costs. The businesses that keep on top of the digital revolution and are able to use this to their advantage will find that there are actually a number of ways in which they can use the modern, connected world, to keep on top of costs far better than ever before, and to save significant amounts of money in the process. But the roots of digital transformation go farther and wider than just cost savings. Company digital transformation leads to creating processes that deliver opportunities for workforce value-creation and strong company culture. 

Many companies have had to undertake huge digital transformations since the COVID-19 crisis and the recession that this caused, but digital processes are proving to create new opportunities for those very same companies. According to statistics, spending on digital transformation (DX) for 2022 is projected to reach 1.78 trillion U.S. dollars. Between 2020 and 2023, direct digital transformation investments are forecast to amount to almost 7 trillion U.S. dollars.

In this guide, we are going to study the ways in which transforming into a digital business can actually save a lot of money and have a positive impact on business success and growth. People tend to know about things like moving away from the office, and how this can save some money for businesses, but this is just one of the methods. We delve into more below.

Reducing Margins of Error

The margin of error is something that can be very hard for businesses to track and measure, and it is not only about accounting. Digitalization has a positive impact in such areas of business as sales, marketing, promotions, advertising, or operations and their automation solves tonnes of issues. In some estimates, human errors can be reduced to the tune of 90% by a switch to digital.

Of course, it depends on so many different things about your business nature, but with a trail of all that is going on, and the improved option to train employees and streamline processes, errors are far less likely than they would have been without a company digital revolution.

Some of this also comes from the automation of processes. Even simple things like ensuring that reports are generated and shared can reduce the errors within your business. In some industries, it could be that digital reporting and real-time tracking could mean you don’t over-order, or that fewer errors are made in a production line.

There are many different ways that human error has its costs, but digitizing is almost always a way to reduce this if implemented well.

Reducing Machine and Employee Downtime

Automation and digitization allow you to reduce the number of breakdowns, improve tech support, and ultimately improve customer care and employee morale, as missed deadlines or downtimes can cost any business greatly.

Business digital transformation can be a way to better understand the systems you have in place as well as the people you have running them. Some companies use a digital transformation agency to implement new technologies that can help to improve the way equipment and workforce are utilized.

​​Integrating a biometric time clock is an example of a way to track employees, and it can give a detailed account of the clock in and clock out times employees have as well as what they are doing during their working hours. This can help with things like scheduling and will improve workplace discipline by creating a healthy company culture and increasing employee motivation and productivity.

Better Negotiation With Suppliers

This is one of the areas of running a business that is hard to imagine doing without access to the digital world. Being able to implement effective systems can save businesses money in a variety of different ways. Here also digital transformation is an essential step for improving and creating new effective operating models.

You can reduce wastage, for a start, but the key to saving a lot of money may be automating your supply chain. Harnessing databases and automating the process can be a way to ensure you are buying things at the best possible price, and in bulk, as required. You can also negotiate better with suppliers, knowing what else is available and being able to compare and contrast.

You may also be able to automate a lot of the ordering systems of your business to place orders when costs are low when stock is low and at the ideal time for your own business. On top of that, communication with suppliers should be faster and more streamlined, meaning that you can make orders in a more flexible way and make the most of affordable pricing when it is on offer. Tracking inventory can be done on a huge scale with ease using the right software and technology.

Energy Costs

It is usually expensive to keep your business up and running. It starts from equipment maintenance and repairs to lighting the premises. The workplace operating costs can quickly add up. And this is when business owners start to look for ways to trim expenses wherever possible. A great point to start is by automating your office to save energy.

Using digital technology allows your company to save on energy costs. You may not need to use the same level of energy within an office environment, but the same is true for systems in manufacturing and other factories. Following the right maintenance schedules and keeping all of your systems in the proper condition at all times is a way to save money.

On the scale of one small home office, the savings are minimal, but for many facilities, the savings could be huge. By analyzing your power usage and optimizing it, or even automating to use more power when it is cheaper, you can enjoy large savings.

Personnel Costs

Personnel costs can be wide-reaching within an organization. They can involve a lot of travel, training, and meetings to ensure a high level of care for employees. A lot of personnel management can actually be streamlined and automated by going ‘digital’. Not only does it make it quicker for management to communicate, but there are also plenty of ways that you can more easily work with your employees. 

Training can be digitized, as can onboarding processes, and many of the other aspects of personnel management. You may need fewer people working on this to keep your workforce happy or to monitor things like staff perks and benefits, in-house promotions, and other elements of human resources. Better management of employees often has the ‘soft’ benefit of getting more out of the staff you have. It’s hard to measure, but the benefits are clear.

Increased Agility

This is another area of business that can be hard to measure. However, the possibilities for companies to innovate, and quickly deliver on new ideas, are made so much easier by being digitally agile. It’s quick and easy to get company-wide messages spread among your business, as well as make the changes that you need to. Everything from switching suppliers to quickly changing the way a whole project is going to run.

The agility of a company is enhanced by the right online systems and tools, such as project management software that allows messages and goals to be passed from the very top of a business down to everyone involved in a matter of hours, rather than having to slowly spread around different branches and teams within your business.

In the modern age, agility is undeniably one of the most valuable assets for a company. The bigger a business gets, the more they tend to lose that agility, but it doesn’t have to be the case, and digital transformation is one of the key ways to keep things straightforward even as your organization continues to grow and expand.


“Digital maturity” is a term often used regarding how well a business has taken to the digital age. This digital maturity has so many benefits for a business, and one of these is the opportunity to reduce cost.

Your cost-saving mission can take a lot of different forms. For some businesses, it means using analytics to better spread resources, or finding out how they can use their workforce better. For other businesses, digital transformation can mean access to more suppliers, more products, and the very best prices.

It is almost inevitable now that the businesses that embrace their digital transformation and get one step ahead are those that will thrive. By keeping employees happy and engaged, quickly being able to implement ideas, and saving money by being a ‘nimble’ business even as they grow, some businesses can totally transform in the wake of the digital changes we have all been made to undertake in recent years, as the pandemic and recession forced so many companies into a virtual environment.

About the Author:

Meggie Nelson is an HR Manager at AMGtime and a passionate freelance writer with an ongoing curiosity to learn new things. She is deeply convinced that valuable experience sharing is key to business success. Meggie believes in a win-win formula and utilizes it on a daily basis in staff management.


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