How to Cut Costs Without Cutting Effectiveness

Technological Advances Can Improve an Agency’s Bottom Line

In any business, large or small, there is one mantra that gets chanted over and over anytime the economy goes even a little weak: cut costs. Of course when the economy completely tanks and ordinary citizens start wondering if they should keep their money in their mattresses instead of the major banks, the mantra does seem to get noticeably louder.

Generally speaking, cutting costs is good advice in any economy. Even when times are flush you shouldn’t have to pay for things you don’t need — or pay more than necessary for the things you do need. But when money gets tight, you want to be sure you’re using your resources more efficiently.

One strategy that has had an effect on insurance businesses of all sizes is moving away from purchasing technology that requires software and/or hardware. Web-based services offer a “pay-as-you-go” model that eliminates the need for huge up-front capital expenditures, high maintenance costs and ongoing support costs. Such services also can ensure that the technology you’re using has the latest features and upgrades.

Here’s how it works. Let’s say your business relies on faxes, and you send and/or receive enough that you need a dedicated line for your fax machine. Then one day the machine finally gives up the ghost. Normally, you would head to the local office supply or other electronics retailer and purchase a new machine. Of course you’ll also need a spare toner or two, which adds to the cost. Then you have to set up and install the new machine, as well as find a place to dispose of the old one.

An alternate option would be to sign up for an Internet fax service. With that service, insurance professionals can send and receive faxes on a personal desktop computer, laptop or mobile device — no additional machine is required. This eliminates the cost of the machine and the toner. You also can eliminate the cost of your business’ second phone line because all faxes will be sent and received via the Internet connection you already have. Because the files come in electronically, you’ll be able to cut back on your paper consumption costs as well; you only print the pages you choose to print.

Taking advantage of technological cost savings is not restricted to faxes. Larger, more complex applications such as a contact management or e-mail campaign management systems provide greater opportunities for savings because you eliminate the need to maintain both hardware and software.

Typically when you purchase a business application, you have to install it onto a server or multiple servers, depending on the application and the size of your organization. Once the application is up and running, one or more information technology (IT) people are required to keep the systems and servers running at peak efficiency. That’s an expense, whether internal or external. Then add to your bill the monthly maintenance costs most software manufacturers require as part of the license. If there is a significant software upgrade, there is another cost, and you again have to call on IT to complete the process. If the server goes bad, there’s an additional cost to replace the hardware.

Moving to a Web-based model can reduce a business’ overall costs. The big upfront cost for hardware and software is replaced by a small monthly fee. In most cases, you don’t need any involvement from IT to get the service running — it’s all self-contained. The same goes for hardware and software maintenance. It all happens behind the scenes, saving time and money while assuring you’re benefiting from the software’s latest features.

Should a technical issue arise, one call to the supplier’s tech support group generally solves the problem, again at no cost to you.

This move to Web-based services isn’t just for “outlier” applications either. Even core insurance applications, such as an office productivity suite, are now moving away from the traditional client/server model to being Web-based. The reason is simple: Because keeping applications running is their primary business instead of a utility, service-providers dedicate considerably more resources to that function than internal IT departments, resulting in greater uptime.

If you’re looking for ways to reduce your own business costs — and who isn’t these days? — consider moving some of your applications to the Web. It’s a great way to cut costs without cutting effectiveness.