How much are your automation tools really costing you?

How much are your automation tools ACTUALLY costing you? An informed approach to software creep.

Right now, businesses across Australia are finding themselves knee-deep in lengthy conversations with their accounting team.

The countless spreadsheets, profit-and-loss statements, and extra cups of coffee during marathon meetings can only mean one thing…

It’s the end of the financial year (EOFY) in Australia! Time to dot the I's, cross the T's, and tighten the business budget.

The EOFY always places pressure on Australian businesses to trim their expenses and realign their budgets, but with Australia’s current economic climate and recent slowdown, this pressure is much more pronounced.

Right now, many businesses are struggling.

In August 2023, it was announced that 15% of Australian businesses had failed in the previous 12 months – the worst rate since the Global Financial Crisis (GFC).

In the wake of that, I suspect that your social media feeds are inundated with articles and content promising to reveal the secrets to slashing costs and squirrelling away those precious extra dollars this June. I know mine certainly is.

My favourite headline is one that I see every single year.

Often when I click on the headline, it’s just another rehash of the tired narrative about "software creep" or "subscription creep”. It reads something like this:

"How much are your automation tools really costing you?"

Hang on. That’s the title of this article.

Correct, only I intend on doing things a little differently. Instead of encouraging you to ruthlessly claw back your automation stack in a frenzy this EOFY, I'm here to challenge the conventional wisdom and hopefully encourage some calm, informed decision-making.

That’s not to say I disagree with this wisdom entirely (I don’t), just that it requires some important nuance…

What if, instead of focusing solely on short-term savings, we considered the long-term implications of scaling back on automation? What does reducing your automation stack actually cost you in terms of efficiency, productivity, and ultimately, your bottom line?

Put simply, are your expense cuts this EOFY costing you for the long term?

I’m eager to know, but I don’t think it’s something that can be answered simply by looking at a balance sheet. I think we need to dive much deeper.

Let’s find out.

Defining actual Software Creep

Subscription Creep. Tech Creep. Automation Creep. Software Creep. They all overlap and can be used somewhat interchangeably, but for this article, I’m going to refer to the latter.

Software Creep can be a very real and concerning problem for both businesses and individual consumers, but that doesn’t mean all software and automation tools are a concern. To show you what I mean, let’s get clear on a couple of definitions and distinguish between software stack and software creep.

From a business perspective…

a software stack refers to a collection of recurring tools and services used by an organisation to fulfil various needs or functions within its operations.

On the other hand, software creep is very different.

Software creep, in its many forms, generally refers to the gradual accumulation of various software expenses, each seemingly important yet collectively imposing a significant financial burden on the business.

Think of software creep as death by a thousand cuts – no single software expense is damaging, but as a whole (when left unchecked), the consequences can be enormous.

The important thing to keep in mind when discussing these definitions is that not all software stacks are burdened by software creep. There is nothing inherently wrong with multiple software or automation tools if they are properly managed. Problems generally only arise when these software and tools are mismanaged.

So, how can you tell the difference, and therefore, make the right budgetary decisions this EOFY?

It all starts by reframing how we view software creep to better align with its definition.

Reframing Software Creep

The best way to determine if your business is suffering from software creep is not simply by listing out all your expenses and gawking at the number that appears.

Smart financial decisions require a more nuanced perspective and an acknowledgement of the intrinsic relationship between business growth and technological investment.

As we all know and practice, as a business expands and evolves, so too must its technological infrastructure.

Basic economics suggests that the inputs to a business – its tools, systems, and automation – are largely what determine its output. Therefore, for output to rise, so too must business inputs (generally speaking).

In this way, a certain degree of software creep is not only natural but indicative of progress and expansion.

As I’ve come to learn in my many years running marketing agencies, the key to avoiding negative software creep lies in ensuring that these tools scale proportionally with business growth.

In other words, if your business is growing in line with your software and automation tools, these tools are likely doing their job. However, if your business isn’t growing, yet your software stack is, it may be time to scale back.

Rather than simply viewing software and automation tools as costs to be minimised during a budget reset or cut-back, we need to look at these tools as strategic investments into the business' future.

Essentially, this means that the right tools may be costing you now, but they are key to your business results in the future.

Of course, during the EOFY frenzy, many accountants or advisors may caution against certain expenses, painting them as red flags for your budget or as unnecessary expenses, but not all expenses are created equal.

The best thing to do is ask yourself (and your team); “Are these subscriptions enhancing efficiency, streamlining processes, or driving revenue growth?”.

If the answer is yes, then they aren’t just costs, they are assets – and they're doing exactly what they were designed to.

In essence, a growing subscription stack should not be feared as subscription creep, but rather strategically managed to ensure that each current or additional subscription aligns with the business' trajectory and adds tangible value to its operations.

Opportunity Cost of Marketing Automation Software

If you’re still struggling to assess whether or not your current software stack is optimised, or you’re unsure if it's getting unnecessarily bloated, consider reframing your perspective.

Rather than fixating on the immediate cost of each software or automation tool, shift your mindset once again from "What is this software costing me?" to "What am I missing out on by not having this software or automation tool?"

This strategy shifts your focus from monetary cost to opportunity cost and is a great way to understand the potential gains you will leave unrealised in terms of productivity, innovation, and competitive advantage if you cancel your software subscription or opt not to subscribe in the first place.

A form of strategic thinking often encouraged by the likes of Warren Buffet and Charlie Munger, this emphasises the potential benefits and advantages gained from implementing the software or automation tool, rather than simply viewing it as a hefty expense on the balance sheet – helping to minimise the likelihood of making a poor business decision this end of financial year.

Let’s look at this through the lens of our white-labelled LinkedIn & email outreach automation tool that we provide at HRS .

With regard to opportunity cost, while this tool does incur an immediate budgetary expense, this is significantly justified when you realise that, without it, you’d be robbing your business of a primary customer-generating tool and shrinking your client base over the long run.

Put simply, the opportunity cost of not investing in this particular software is enormous, and it should therefore be added (or kept) in your stack.

Comparative Cost of Marketing Automation Software

Another helpful way to take your analysis a step further and make an even more informed decision when it comes to your software spending is to compare the cost of a piece of software or your entire software stack to the potential staffing or resource costs that you will incur by trying to fill its responsibilities manually.

Again, let’s play this out through the lens of our white-labelled LinkedIn & email outreach automation tool at HRS .

In this instance, the alternative cost would likely be sales staff.

Not only is the automation tool far cheaper than the multiple staff you would otherwise hire, but the automation tool also works 24/7; it doesn’t call in sick or leave you with staffing shortages during busy holiday periods.

For this reason, while the EOFY buzz around cost-cutting may leave you questioning much of your software stack, it’s clear that well-informed automation investments (as opposed to rushed decisions) are crucial for long-term business success.

In the end, opting against a valuable software or automation tool because your budget is tight this EOFY may be required. I am simply suggesting that a more thoughtful approach – one that considers opportunity cost, comparative cost, and a clear picture of the tool’s ROI – is needed to make an informed decision.

Please note that this is not financial advice.

Speak to my team at HRS and learn about how we can help you complete your B2B service offering.

As a marketing agency owner myself, I understand your eagerness to grow and expand your service offering – but despite this eagerness, I recognise the value of determining WHEN the right time is to grow your business.

At HRS , we offer a powerful, white-labelled LinkedIn & email outreach automation tool to help digital marketing agencies succeed by using sales accelerator techniques, technology and data-backed methodology.

This way, you can expand your B2B digital marketing service in a cost-effective, streamlined manner and grow your market share more sustainably.

By making powerful features simple, our automated outreach tool can help you scale and supercharge your client’s B2B outreach efforts over the long term without locking them into a retainer or having to rely on ad-hoc, sporadic business.

If you operate a digital advertising, marketing or content agency that services clients in B2B industries, then we can help you scale whilst growing profits and minimising costs!

Get in touch with HRS and boost your agency growth today.