To run a successful Microsoft CSP business, you need to focus on cost optimization along with revenue growth and expanding the customer base. Operating in a highly competitive business environment and catering to the continuously changing customer demands can put a financial strain on your CSP business. Therefore, to maximize profits you need to explore opportunities to optimize business costs. Effective cost optimization can be achieved by a combination of strategy, best practices, and the use of different tools including CSP automation tools. Cost optimization is a continuous process as opposed to short-term cost-cutting measures. Simply trimming expenses can have a negative impact on the business. Strategic cost optimization can help you in reducing costs without hampering business growth. Cost optimization techniques focus on the long-term reduction of unnecessary spending and investing the savings into other areas that can increase efficiency and maximize revenue. Without a cost optimization strategy in place, there can be chances of running out of money resulting in the shutting down of business.
Though cost optimization is necessary for sustained business growth there are many challenges CSPs face when trying to reduce costs. A few of the roadblocks to cost optimization include lack of visibility, poor forecasting, budgeting, billing complexities, and failure to adopt the latest technologies. Using the correct techniques along with CSP automation tools, CSPs can overcome challenges and achieve cost optimization.
Cost optimization mistakes to avoid as a Microsoft CSP
As a Microsoft CSP, cost optimization is essential to improve the financials of the business. With a large number of benefits, many CSPs tend to start their cost optimization journey without giving it much thought. Lack of planning leads to mistakes that can reduce the impact of your cost-optimization efforts and harm your business in the long run. Some of the common mistakes you can make while trying to optimize costs as a Microsoft CSP are discussed below.
Not tracking the cash-flow
Cashflow tracking gives you the complete picture of the financial health of your Microsoft CSP business. Many CSPs are unable to keep track of the inflow and outflow of funds. Without an accurate cash flow statement, it is difficult to take the right business decisions. Without knowing where you are spending money you will be unable to identify areas where spending can be reduced.
Relying solely on manual cost management
Effective cost management requires a lot of control and monitoring. Manually managing substantial amounts of financial information can be tedious as well as costly for your Microsoft CSP business. Manually preparing customer invoices, and tracking payments using spreadsheets is not only time-consuming but is also prone to human errors. In the absence of CSP automation, the chances of errors increase which can cause potential revenue loss.
Setting unreasonable targets
Overestimating the expected savings and setting unrealistic targets can impact business growth. According to Gartner, “Fewer than half (43%) of leaders actually achieve the level of savings they set out to in the first year of cost reduction.” Raising the cost-cutting bar too high can result in the cost optimization plan failing. Severe cost-cutting measures can impact the productivity and efficacy of your workforce, leading to poor performance and reduced sales.
Sacrificing product or service quality
Sometimes cost optimization efforts lead to lowering the quality of products or customer service. Laying off employees or not investing in CSP automation tools to save money can hurt your Microsoft CSP business. If you fail to deliver value and provide great customer service, your sales levels will go down. Poor customer experience not only affects potential sales but is also a cause of customer churn.
Reducing the training budget
In the process of optimizing costs, many CSPs might reduce the training budget without analyzing the implications of such a step. Training your employees and equipping them with the relevant skill set is necessary for business growth. Without periodic training the skills of the employees become obsolete, and you are unable to cater to the growing demands of the customers. You can read more about building technical and sales capability to grow your Microsoft CSP business in our blog.
How automation can help CSPs achieve cloud cost optimization
CSPs need to optimize their costs to run a successful business. There are a variety of measures that CSPs can follow to achieve their goal of cost optimization. Adopting CSP automation can help accelerate the cost optimization journey for CSPs.
CSP automation tools provide complete visibility into the resources in use and the cost associated with each resource. CSP automation tools make billing reconciliation and payment collection simpler and faster. Automating the reconciliation process not only saves time but also reduces manual inefficiencies. Enhanced visibility allows you to manage the resources and processes more effectively.
License tracking and optimization
CSP automation tools make it easier to track the licenses that are being used by your customers. Any unbilled licenses are easily and automatically identified and billed. Your customers will pay only for the licenses they use. Any additions or deletions in the number of licenses in the middle of the billing cycle can result in inaccurate billing. CSP billing automation tools ensure that all license and subscription changes are recorded and updated to ensure billing accuracy. Thus, minimizing revenue leakages due to missed or underbilling.
The extensive finance reports generated by CSP automation tools can help understand purchase trends. This can help you monitor your sales, assess performance, and identify products that are high in demand that can help in sales forecasting. The highly accurate and detailed reports can assist you in making data-driven business decisions leading to optimizing profit margins. The insights provided by the CSP automation tools can also help you optimize your marketplace offers resulting in delivering better value to the customers.
Auto release unassigned licenses
Customers can make changes to their subscriptions resulting in reducing the number of licenses that they need. Due to this, there could be instances of unassigned or unused licenses with you. Microsoft will bill you for all the licenses purchased irrespective of whether they are being used or not. Having unused licenses will reduce the profitability of your Microsoft CSP business as you will be paying for licenses but would not be able to bill your customers for them. CSP automation can save you from this cost by auto releasing any unassigned licenses which are not earning any revenue for you.
Connect with C3 to optimize your cloud costs
Partnering with C3 makes optimizing costs for your Microsoft CSP business easier. Leveraging the power of automated invoicing and provisioning, license tracking, and extensive reporting allows CSPs to control costs and set cloud budgets with multi-level thresholds. Get in touch with us to know more about cost optimization for your CSP business.