How to Optimize Cost Management Approaches

𝗪𝗵𝘆 𝗧𝗕𝗠 𝗶𝘀 𝘁𝗵𝗲 𝗺𝗼𝘀𝘁 𝘂𝗻𝗱𝗲𝗿𝗿𝗮𝘁𝗲𝗱 𝗰𝗼𝘀𝘁 𝗰𝗼𝗻𝘁𝗿𝗼𝗹 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆? Everyone talks about FinOps when it comes to cloud cost control. But TBM? It’s the only framework that provides a structured way to align IT spending - both digital and non-digital - with business value. Today most IT cost-cutting efforts focus on cloud costs. But what about on-prem data centers, networking, end-user computing, software licensing, IT service management, and physical infrastructure? That’s where TBM shines. Unlike FinOps, which primarily focuses on cloud cost management, TBM covers all IT spend - digital and non-digital. That means: ✓ On-prem data centers (server costs, cooling, power, maintenance) ✓ SaaS and enterprise software (license costs, renewals, shadow IT) ✓ Network infrastructure (bandwidth costs, MPLS, SD-WAN optimizations) ✓ End-user computing (desktops, mobile devices, IT support costs) ✓ IT services & outsourcing (managed services, BPOs, contract negotiations) This is what makes TBM different - it breaks IT costs into layers: ✓ Cost Pools – The raw IT expenses (hardware, software, labor, facilities, etc.). ✓ IT Towers – Logical groupings like compute, storage, network, and applications. ✓ Products & Services – The services IT delivers (e.g., CRM platforms, cloud storage, collaboration tools). ✓ Business Units – The actual consumers of IT resources (sales, marketing, HR, etc.). This multi-layer mapping gives granular visibility into IT spending. This enables CIOs and CFOs optimize across hybrid IT environments. 𝗪𝗵𝘆 𝗜 𝗹𝗼𝘃𝗲 𝗧𝗕𝗠? Most organizations optimize reactively - shutting down workloads, cutting headcount, or delaying upgrades. TBM forces a proactive, data-driven approach by integrating: ✓ Cost transparency – Mapping IT costs to business units, services, and outcomes ✓ Showback/chargeback – Assigning costs directly to business teams for accountability ✓ Unit economics – Measuring IT efficiency per unit of business value (cost per transaction, cost per API call, etc.) ✓ Benchmarking – Comparing internal IT costs with industry standards to identify waste The result? ✓ IT isn’t just seen as a cost center - it becomes a strategic partner. ✓ Cost-cutting doesn’t compromise performance or innovation. ✓ Businesses make smarter investment decisions, balancing cost, quality, and value. Why TBM is still underappreciated? TBM doesn’t promise quick fixes. It requires a mature cost culture, strong leadership, and deep integration into financial planning. And the truth is - many companies don’t want to do the hard work. They’d rather cut budgets blindly than ask the harder question: "Is this IT spend actually driving business value?" The companies that do embrace TBM gain full control over IT costs - cloud, data center, software, infrastructure, services, everything. TBM is about spending right, not spending less. #TBM Technology Business Management (TBM) Council

𝗔𝗿𝗲 𝘆𝗼𝘂 𝗽𝗿𝗼𝗮𝗰𝘁𝗶𝘃𝗲𝗹𝘆 𝗺𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝘆𝗼𝘂𝗿 𝗦𝗼𝘂𝗿𝗰𝗲-𝘁𝗼-𝗣𝗮𝘆 𝘁𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆 𝗰𝗼𝘀𝘁𝘀? If not, why let savings from smart Procurement slip away due to outdated technology or suboptimal use? S2P technology plays a central role in cost management, yet many companies lack a strategic approach to continuously assess and optimise their tech stack. Companies can adopt Bain & Co’s "𝗥𝗲𝗱𝘂𝗰𝗲, 𝗥𝗲𝗽𝗹𝗮𝗰𝗲, 𝗮𝗻𝗱 𝗥𝗲𝘁𝗵𝗶𝗻𝗸" model to continuously evaluate their technology infrastructure and costs, ensuring a more optimised and sustainable cost profile. Here is the model in action for Source to Pay technology cost optimisation: ▪️ 𝗥𝗲𝗱𝘂𝗰𝗲 to recover 10 to 20% of costs through short-term actions such as - adjusting licenses to match actual usage and adoption patterns - discontinuing features or functionalities that add little value - switching off modules where business capabilities have not yet caught up Avoid over-licensing by matching user access to actual needs, ensuring modules align with Procurement’s readiness. ▪️ 𝗥𝗲𝗽𝗹𝗮𝗰𝗲 to yield 20 to 30% of savings by - transitioning to cost-optimal, flexible solutions and getting out of lock-ins - switching subscription models when premium offerings are unnecessary - consolidating overlapping tools that offer similar features For example, merge multiple eSourcing tools into a primary platform and adopt a tender-based pricing for niche auction needs. This helps to adjust the cost profile of your Source to Pay technology with the actual needs. ▪️ 𝗥𝗲𝘁𝗵𝗶𝗻𝗸 to realise up to 40% cost optimisation by: - reimagining the architecture with a modular, composable design - automating and orchestrating processes and integrating new digital tools - reevaluate the mix of best-of-breed solutions vs integrated suites A new Procurement strategy requires a fresh look at the S2P tech stack to ensure it adapts and supports growth cost-effectively, while offering flexibility through additional digital levers like AI and automation. 𝗢𝗽𝘁𝗶𝗺𝗶𝘀𝗶𝗻𝗴 𝗦𝟮𝗣 𝘁𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆 𝗶𝘀 𝗮 𝗰𝗼𝗻𝘁𝗶𝗻𝘂𝗼𝘂𝘀 𝗷𝗼𝘂𝗿𝗻𝗲𝘆, 𝗻𝗼𝘁 𝗮 𝗼𝗻𝗲-𝘁𝗶𝗺𝗲 𝗲𝗳𝗳𝗼𝗿𝘁, especially with contractual commitments, sunk costs, and change management challenges. Rather than following IT preferences and standards, it’s about keeping technology fresh and aligned with business needs as they evolve. ❓How do you manage your S2P technology to adapt to changing business needs while maintaining cost efficiency.

In a recent roundtable with fellow CXOs, a recurring theme emerged: the staggering costs associated with artificial intelligence (AI) implementation. While AI promises transformative benefits, many organizations find themselves grappling with unexpectedly high Total Cost of Ownership (TCO). Businesses are seeking innovative ways to optimize AI spending without compromising performance. Two pain points stood out in our discussion: module customization and production-readiness costs. AI isn't just about implementation; it's about sustainable integration. The real challenge lies in making AI cost-effective throughout its lifecycle. The real value of AI is not in the model, but in the data and infrastructure that supports it. As AI becomes increasingly essential for competitive advantage, how can businesses optimize costs to make it more accessible? Strategies for AI Cost Optimization 1.Efficient Customization - Leverage low-code/no-code platforms can reduce development time - Utilize pre-trained models and transfer learning to cut down on customization needs 2. Streamlined Production Deployment - Implement MLOps practices for faster time-to-market for AI projects - Adopt containerization and orchestration tools to improve resource utilization 3. Cloud Cost Management -Use spot instances and auto-scaling to reduce cloud costs for non-critical workloads. - Leverage reserved instances For predictable, long-term usage. These savings can reach good dollars compared to on-demand pricing. 4.Hardware Optimization - Implement edge computing to reduce data transfer costs - Invest in specialized AI chips that can offer better performance per watt compared to general-purpose processors. 5.Software Efficiency - Right LLMS for all queries rather than single big LLM is being tried by many - Apply model compression techniques such as Pruning and quantization that can reduce model size without significant accuracy loss. - Adopt efficient training algorithms Techniques like mixed precision training to speed up the process -By streamlining repetitive tasks, organizations can reallocate resources to more strategic initiatives 6.Data Optimization - Focus on data quality since it can reduce training iterations - Utilize synthetic data to supplement expensive real-world data, potentially cutting data acquisition costs. In conclusion, embracing AI-driven strategies for cost optimization is not just a trend; it is a necessity for organizations looking to thrive in today's competitive landscape. By leveraging AI, businesses can not only optimize their costs but also enhance their operational efficiency, paving the way for sustainable growth. What other AI cost optimization strategies have you found effective? Share your insights below! #MachineLearning #DataScience #CostEfficiency #Business #Technology #Innovation #ganitinc #AIOptimization #CostEfficiency #EnterpriseAI #TechInnovation #AITCO

The Hidden Supply Chain Costs Quietly Draining Your Profitability Supply Chain Management is a constant balancing act between efficiency, cost control, and customer satisfaction. But here’s the catch: the real cost killers are often invisible until they erode your margins. Let’s break them down 👇 Key Cost Components 1️⃣ Supplier Mapping & Risk Assessment Costs start long before production; supplier evaluation, onboarding, negotiation, and audits. These ensure reliability but can silently inflate budgets if overdone 2️⃣ Production / Manufacturing Raw materials, energy, labor, QC, and scrap all add up. Kaizen thinking can transform these from cost centers into value engines 3️⃣ Transportation & Warehousing Freight rates, fill-rate, fuel volatility, and inventory levels quietly eat into profitability. Optimized fill, routing and better warehouse utilization can turn the tide 4️⃣ Delivered Cost Shipping, handling, customs, and last-mile delivery impact both costs and customer satisfaction. Streamlining this delivers a double win 5️⃣ Installed Cost Costs don’t stop at delivery; assembly, testing, training, customer integration also matter 6️⃣ Operating Cost Obsolescence, returns, repairs, and service operations. Lifecycle thinking and predictive maintenance help minimize expense leaks 7️⃣ Cross-Category Costs Labor, technology, insurance, real estate, compliance, sustainability affect every stage. Visibility here is key to managing total spend. Insights for Cost Optimization ✅ See the “true” Cost‑to‑Serve Build a cost‑to‑serve view by customer, channel, and SKU to expose where you earn vs. where you bleed ✅ Design segmented supply chains Create different flows for stable vs. volatile demand and premium vs. standard service instead of a one‑size‑fits‑all model ✅ Automate hidden manual work Target planning, warehousing, and order processing for automation to cut errors, lead times, and “just in case” buffers. ✅ Tune inventory across lifecycle Align inventory policies with product life stage and variability, using multi‑echelon logic instead of blanket safety‑stock rules. ✅ Turn suppliers into cost partners Shift from price haggling to joint cost roadmaps, VMI/SMI, and long‑term agreements focused on total landed cost ✅ Make cost a governance topic, not a project Embed cost KPIs into S&OP/IBP, with clear ownership, link decisions to margin and resilience ✅ Embed Total Cost of Ownership Integrate TCO into sourcing, make‑or‑buy, and network design so “cheapest” and “best” stop being different answers. Supply chain cost management isn’t cutting expenses. It’s building resilience in a world shaped by volatility and disruption. By understanding hidden costs and applying right strategies, leaders safeguard profitability while sustaining high service levels. What cost optimization lever is working best for you right now : visibility, analytics, or process standardization?

Last week, the CEO of a major international marketplace asked me, "James, how can I lower my payment costs?" It’s a complex issue, but here’s where I said they should begin: 1. Know your business inside out Before you can optimize costs, you need to understand your payment processing operations thoroughly. What payment methods do you use? What are your transaction volumes? What's your refund rate? Your decline ratio? These details matter. 2. Understand your pricing model Payment pricing can be deceptively complex. Some providers charge per successful transaction, others for every event (including declines and refunds). Know which model you're on and how it aligns with your business patterns. 3. Dive into your merchant discount rate This is typically your biggest cost. Not all acquirers are transparent about their margins. Look for providers offering "Interchange Plus Plus" pricing for more clarity. 4. Consider Alternative Payment Methods In markets like Brazil, solutions like Pix can significantly reduce costs compared to traditional card payments. Don't overlook local payment methods when expanding internationally. 5. Watch Out for Hidden Costs Chargebacks, currency conversion, and various 'event' fees can add up quickly. Make sure you're accounting for all costs, not just the headline rate. 6. Leverage Your Scale If you're a major marketplace, you have negotiating power. Don't be afraid to use it, but remember - the lowest price isn't always the best deal if it comes with poor service or limited features. 7. Think Holistically Sometimes, paying a bit more for a solution that increases approval rates or reduces fraud can lead to higher overall profitability. Don't focus solely on lowering costs at the expense of growth. TLDR: There's no one-size-fits-all solution in payments. The key is to deeply understand your business needs and the intricacies of payment processing. Only then can you make informed decisions that truly optimize your costs.

Managing labor spend is a balancing act for hospital CFOs and CNOs. Cutting costs without impacting patient care requires strategic, sustainable solutions. Here are 3 approaches that can make a significant impact: 1. Optimized Staffing Through Predictive Analytics Leveraging advanced predictive analytics helps hospitals forecast patient demand with precision. By analyzing historical data and real-time trends, staffing schedules can be adjusted to meet needs without excess or shortages. This minimizes costly last-minute hiring and avoids the burnout associated with over-scheduling. → The result? A more balanced budget and a team that’s neither overstretched nor underutilized. 2. Layering Workforce Teams- Internal Float Pools, Per Diem, Agency Staff, etc. Cross-training clinical and non-clinical staff to handle multiple care settings and specialties builds flexibility and offers growth opportunities to interested team members. Having teams that are specifically right sized for your organization allows you to make the most of your predictive technology.  It is often not enough to have one internal float pool, it requires layers of specialized staff equipped to respond to specific demand. A pool built to fill FMLA needs, a pool built to fill call-offs, a pool built to fill vacations requests.   When specialized teams can seamlessly shift responsibilities, gaps in care coverage shrink without inflating costs. 3. Investment in Workforce Retention High turnover rates are budget drainers, with recruitment, onboarding, and training adding up fast. Implementing programs that support staff well-being, provide career advancement, and recognize achievements fosters loyalty. → A stable, satisfied workforce means fewer disruptions and lower expenses tied to filling vacancies. These strategies prioritize sustainable cost management while ensuring patient care standards remain high. What’s your approach to balancing labor costs and operational efficiency? Photo by Jeremy Bishop

I still hear CS leaders asking for more headcount and while I’m not saying it’s unnecessary… I am asking: Do you actually know where your team’s time is going today? Most leaders don’t. Few have ever done a true top-down and bottom-up analysis of how their team spends their time. Let’s be real, not all customers are created equal: Customers in onboarding or their first year often need more engagement than a year-3 customer. At-risk customers might require deep partnership while healthy ones can thrive in lighter-touch models. Some industries are seasonal, March may look nothing like August. If your CSMs manage commercial motions, their time flexes with the customer’s buying cycle. And then there’s the invisible time suck: ❗ Hunting for answers because documentation is poor. ❗ Rebuilding data that lives across 20 systems. ❗ Spending hours creating “insights” instead of delivering them. Before you ask for more heads, do your homework and see what can be optimized first. That’s how you staff responsibly. Here are 5 things you should do before putting in that request with Finance or HR: 1️⃣ Conduct a Time Audit Track where CSMs actually spend time for 2–4 weeks. Don’t assume. 2️⃣ Segment by Customer Profile Map time allocation by ARR, stage, and health to spot imbalance. 3️⃣ Identify Operational Gaps Pinpoint where inefficiency (tools, process, data) eats hours. 4️⃣ Redefine “High Touch” Calibrate your engagement model by value, not volume. 5️⃣ Run a Capacity Model Use data to prove your case for more headcount — or optimization. You might find you do need more people but you’ll also know exactly why and where the leverage is. So before you ask for more … Ask where the time is going.

MISMANAGED OVERHEAD IS THE SILENT PROFIT KILLER IN CONSTRUCTION In construction, poorly managed overhead can quietly erode your profits. Many think hiring more people solves problems, but often, it’s the systems and processes that need fixing. Adding more staff can actually inflate your overhead, hurting your bottom line more than you realize. Let’s break it down with a simple real example: A million-dollar project where you aim for a 20% profit. That’s $200,000 in profit and $800,000 in costs. If you start with your costs and add a 10% markup for profit and 10% for overhead, you end up with $160,000, not $200,000. Your bid now totals $960,000. Subtract your $800,000 costs from the $960,000 bid. You get $160,000. Divide that by $960,000, and your margin drops to roughly 17%. So, you’re not making 20% anymore; you’re making 17%. In construction, understanding the difference between margin and markup is crucial. This is especially true with retainage. If they hold back 10% of your $960,000 contract, you’re left with only $64,000 in free cash flow, not the $200,000 you planned for. To achieve your desired profit, calculate correctly. KNOW YOUR NUMBERS. For a 20% margin, your costs must be 80% of your bid. If you want a 15% margin, your costs should be 85% of your bid. Many companies mistakenly think they’re making 20% by adding 10% for profit and overhead. 𝗧𝗵𝗲𝘆’𝗿𝗲 𝗻𝗼𝘁 𝗮𝗰𝗰𝗼𝘂𝗻𝘁𝗶𝗻𝗴 𝗰𝗼𝗿𝗿𝗲𝗰𝘁𝗹𝘆. In the construction industry, everything is calculated from the contract value DOWN. Missteps in these calculations can cost you significantly, as shown in our example where you lose over 3% or $40,000. To accurately factor in your overhead, add that to your job costs – for example if your overhead is 10% and your job costs $900,000, add 10% to that – now $990,000 are your total costs for the job. Then, add your margin to that number in order to get a real profit number. Worried about winning bids with these calculations? It’s about efficiency and cost management. If the market operates at a 17% margin, you must be realistic about your ability to work within that margin. Sometimes, you need to bid on more projects to cover your costs, sometimes you need to analyze your costs – the project costs and your internal costs – overhead being one of them. Regularly evaluate your costs. Do this annually or semi-annually to stay competitive. Improve your systems and processes instead of just hiring more people. Effective systems and processes often reduce overhead more than adding staff. 𝗛𝗶𝗿𝗶𝗻𝗴 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗮𝗱𝗱𝗿𝗲𝘀𝘀𝗶𝗻𝗴 𝘁𝗵𝗲 𝗿𝗼𝗼𝘁 𝗽𝗿𝗼𝗯𝗹𝗲𝗺𝘀 𝗰𝗮𝗻 𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗲 𝗼𝘃𝗲𝗿𝗵𝗲𝗮𝗱 𝗮𝗻𝗱 𝗵𝘂𝗿𝘁 𝗽𝗿𝗼𝗳𝗶𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆. 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗶𝗻𝗴 𝘁𝗵𝗲𝘀𝗲 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗽𝗿𝗶𝗻𝗰𝗶𝗽𝗹𝗲𝘀 𝗶𝘀 𝗲𝘀𝘀𝗲𝗻𝘁𝗶𝗮𝗹 𝗳𝗼𝗿 𝗺𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗮 𝘀𝘂𝗰𝗰𝗲𝘀𝘀𝗳𝘂𝗹 𝗰𝗼𝗻𝘀𝘁𝗿𝘂𝗰𝘁𝗶𝗼𝗻 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀. Scrutinize your costs and refine your processes to stay profitable and competitive.

When we work on projects, we are constantly watching the schedule and budget, but (if I had to pick) these are the 6 things we do that always save us the most on costs: 1 - Review and modify layouts to maximize efficiency. Stacking floor plans (or at least plumbing) is a must. We also look to minimize shared circulation and unfinished/unused spaces as much as possible. While it's tough to pinpoint the savings directly tied to these strategies when well-implemented, we've seen (many times) how wasteful it is when these aren't considered. (Intimate knowledge of the building code goes a long way here.) 2 - Schedule overlap where possible. Not everything needs to happen sequentially. We identify tasks that can run concurrently without compromising quality, significantly reducing overall project timelines. We do this for entitlements, design and construction 3 - Participate in scope meetings - all of them. When you're present for these discussions, you catch potential issues before they become expensive problems. This creates clarity for everyone involved. 4 - Create, maintain, and use vendor relationships. When you have reliable partners who understand your standards, it results in faster quotes, better pricing, and priority scheduling when you need it most. We also share news of upcoming projects with vendors, which helps everyone plan ahead and provide preferred availability. Some of our vendor relationships have saved us hundreds of thousands on single projects. 5 - Structure weekly team meetings. These check-ins create accountability and provide space to address small issues before they become major obstacles. A 1-hour meeting can save days of rework, especially when the meetings follow a structured agenda, where meeting minutes and action items are shared with the entire team. 6 - Track invoicing consistently & review the budget monthly. We do this in the industry-standard format of an anticipated cost report, which matches contract values vs what has been committed and paid to date across consultants and contractors. This disciplined approach to financial management identifies cost exposure early and prevents budget surprises. It's not just bookkeeping—it's proactive risk management. Implementing this framework consistently is how we straighten out projects that have gone a bit sideways, but it's also a great way to run a smooth process from the beginning. This approach doesn't have to be perfect. Implementing only some of these, even partially, is better than nothing. If you're new to development or struggling to find a firm footing on a current project, doing these consistently will help provide the team with clarity, and hopefully, that means ownership can provide clear direction.