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How Implementing ESM Can Reduce Costs

03/21/2019 by: Jaime Spector

Enterprise service management

“There’s no such thing as a free lunch,” so the saying goes. Everything in life has some kind of cost to it. In business, one of the most costly states is that of inefficiency. 

Inefficiency lowers morale, kills productivity, and wastes valuable resources. However, there is a way to overcome inefficiency – enterprise service management solutions. Read on to learn about how ESM can tackle all of these problems, how much it can save you, and how to determine real-world ROI. 

How Does Inefficiency Lower Morale? 

When you think of inefficiency, you probably associate that trait with employees who have lower morale. It stands to reason that if they aren’t particularly motivated to do their jobs, they won’t be efficient. 

However, low morale can actually be caused by inefficiency. How so? To understand this, you have to comprehend some basic aspects of human psychology; when people feel respected by their employer, they want to work harder. When people feel as though their employer has little or no respect for them, they aren’t motivated to do their jobs properly. 

“Low morale costs the American economy as much as $350 billion per year

What’s the link between employer disrespect towards the workforce and inefficiency? We’ll illustrate by way of example. Let’s say that Jane, a new employee, tries to book a meeting room at her office. She discovers it’s a highly manual process – she has to visit the facilities management staff in person to place her request. 

When Jane tells her boss about this process and how inefficient it is, he shrugs. “That’s just the way things are done around here,” he says off-handedly, and returns to his work. Jane feels frustrated after the exchange – she didn’t feel as though her boss even bothered listening to what she had to say. 

How Can Enterprise Service Management Boost Employee Morale? 

How can a technological solution improve something that is so seemingly unrelated? ESM management can make enterprise service delivery more efficient, which makes employees happier. 

We’ll go back to the example of Jane and booking a room. Instead of visiting the facilities management department in person, she navigates to either a chatbot or a self-service portal. Jane types in what room she wants, what day she wants, and if she needs any services (such as a projector or extra tables). 

“The median cost of employee turnover is 21% of their annual salary”

The chatbot or self-service portal is connected to a company-wide calendar, so it can check to see if that date is already booked by someone else (and if the services Jane has requested are available). What was previously a tedious, time-consuming process is now simple and fast. Jane’s morale is higher because she feels like her employer is helping her be more productive. 

How Does Inefficiency Kill Productivity?

The relationship between inefficiency and productivity is easier to understand, because there’s a much clearer impact on productivity when inefficient processes are in place. 

Unfortunately, there are so many inefficient processes in place at organizations today that the effect of inefficiency on productivity is all too clear. The Boston Consulting Group found that between 1997 and 2012, the amount of procedures, vertical layers, interface structures, coordination bodies, and decision approvals needed has increased by anywhere from 50 percent to 350 percent in American and European companies. 

“Repetitive tasks that could easily be automated cost 19 working days per year per employee”

Take a moment to think about the inefficient processes that you use. They could be lurking across your company – in the Human Resources department, in Finance, in Marketing. As a result of these inefficient processes, your employees are wasting valuable time when they could be doing something more profitable (like meeting customer needs, coming up with new product ideas, or finding ways to expand into new markets).

We’ll illustrate with an example. The employee onboarding process is notoriously inefficient; HR team members must submit requests to the IT department to provide access to all the systems they need to do their jobs. Whether the request is on paper or in an email, it could take days for the employee to get going. 

Forty percent of employees feel their engagement would improve if they had a better onboarding experience”

Put yourself in the shoes of the new employee for a moment. You can’t get anything done without access to the network, let alone your email or other programs that you need to do your job. You won’t be productive (which can also lower your morale). 

How Can Enterprise Service Management Solutions Make Your Employees More Productive? 

ESM solutions play an important role in increasing productivity. We’ll go back to the example of the employee onboarding process. 

The HR team member navigates to a self-service portal or opens a chatbot and types in the request to give the new employee access to the systems he or she needs. In turn, the ESM solution connects to the requisite downstream systems to grant the employee access. There’s no more waiting for days for the IT department to get around to provisioning accounts. Employees can be productive much faster. 

How Does Inefficiency Waste Resources? 

The connection between inefficiency and wasted resources is fairly obvious, yet inefficiency still runs rampant at organizations. In spite of the obvious linkage between the two concepts, not enough action has been taken to make processes more efficient so that resources don’t go to waste. 

Wondering exactly how many resources are being wasted as a result of inefficiency? In an organization with 5,000 employees, inefficient processes can take up to four million hours per year. That’s the equivalent of the time worked by 2,000 employees. 

Forty-four percent of respondents to a 2015 study of British, American, and European business leaders said that the top cause of wasted work hours is inefficient processes”

We’ll go back to the previously-used example of booking a room. Jane wastes valuable time and effort having to visit the facilities management department. That was time she could have been using to work on a project, connect with customers, or otherwise generate value for her company. 

That wasted time, especially if Jane were to find out that she couldn’t get the room on the date she needed and had to find another date, costs the company money. Regardless of how big or profitable a firm is, no one can afford to lose money because their employees have to perform inefficient processes. 

Enterprise service management

How Can Enterprise Service Management Solutions Help You Use Resources More Efficiently? 

ESM solutions either eliminate or drastically reduce wasteful processes. Wasteful processes are what drains a company’s most valuable resources – its employees. 

Jane would save significant amounts of time by logging into a chatbot or navigating to a self-service portal, in which she would type her request. The ESM solution automatically searches the company’s calendar – Jane doesn’t have to wait for a facilities management team member look up whether a date is available or whether there are enough services (such as AV equipment or tables) to fulfill the employee’s request. She can use that extra time in a way that’s profitable for the company. 

How Much Can an Enterprise Management Solution Save Your Company? 

Employee morale, productivity, and wasted resources can be abstract concepts – even though there’s research that has costs attached to each of those concepts. What’s equally important to know is how much an ESM solution can save your firm. 

According to WorkMarket’s 2020 In(Sight) Report, 53% of employees surveyed believe they could save up to two work hours per day with automation. As ESM solutions automate a number of tasks, implementing them could free up 240 hours per year. Supervisors believe automation can save even more time – over three-quarters of them thought that automation can save them three hours per day, which adds up to 360 hours per year. 

How Can You Determine Real-World Return on Investment? 

Now that the cost savings are clearer, the question becomes, “How can I figure out my ROI if I implement an ESM solution?” 

The first step is calculating ROI, and the formula is (gain of investment) – (cost of investment) / (cost of investment). But, how do you work out what gains you’ve made?

“Researchers at Hadoop estimate the potential savings companies will see thanks to automation by 2025 ranges from $5 trillion to $7 trillion”

The gains you see will depend on your industry. In some industries, you might see increased sales because your employees are spending more time making money rather than being mired in inefficiencies. Other industries might experience gains as reductions in costs – you’re spending less money on things like storing paper and printing because you’re automating processes. 

The costs of low morale, low productivity, and wasted resources weigh heavily on a company. While no one wants to be inefficient, so many organizations suffer from just that problem because of cumbersome, inefficient processes. Enterprise services management saves money by making inefficiencies a thing of the past. To learn more about ESM solutions, download From ITSM to ESM: The Evolution of the Digital Enterprise.

| enterprise service management