Companies launch a digital transformation initiative for a variety of reasons. Some are looking to respond to changes in customer demands and preferences, others are trying to remain competitive and some companies see the opportunity to expand into new markets. Whatever your organization’s reason for undertaking a digital transformation project, you will need to plan and budget wisely if you want the project to be a success. Considering that IT budgets are set to increase by almost 2 percent in 2017, according to Gartner, the pressure to provide detailed, accurate budgets is likely to increase as well. If you are responsible for the task, the following tips can help you plan and budget for a digital transformation project that will be completed in 2017.
- Forget what everyone else is doing. For a project to succeed, you must consider what your organization needs. Trying to determine how much another company is spending on digital transformation projects is a bit like trying to determine how much a house might cost without knowing the size, age and location. If you are curious, however, Gartner found that top performers allocated 33 percent of their 2017 IT budgets to digitalization, typical companies allocated 18 percent and trailing performers allocated 7 percent. All groups stated that these numbers would increase approximately 10 percent for 2018.
- Do not make technology the most important part of your plan. Instead, look at your company as a whole. What are the company’s business goals? What opportunities are available for growth or expansion into additional markets? Once you understand where your company is going, you can determine the best technologies for achieving the company’s goals.
- Talk to internal stakeholders. Digital transformation involves the entire company. Go beyond the CFO and COO. Talk to the sales team, your CEO, your marketing team, your customer service representatives and your product teams; these people are excellent sources of information that can inspire innovative changes.
- Spend some time talking to customers. Conduct surveys and interviews to determine their specific pain points, who they turn to besides you, how they rank the competition and what they need or want you to provide. Find trends by analyzing support tickets. Take the time to map the purchase journeys that your customers follow. The better you understand your customers, the more likely you are to find ways to delight them through digital transformation.
- Look for opportunities to secure small wins. While you do not want to be too timid, you should look for ways to build a portfolio of small wins rather than stake the company’s future on a single, massive project. With multiple small projects, you increase the odds that at least one or two will have a highly positive impact. Make a plan to obtain feedback so that you can correct issues or build on your success.
- Determine where a new technology will intersect with your current processes. This is especially critical for customer-facing applications, but you should also consider production lines, remote locations, employee training, the flow of work, field personnel, your company’s help desk and other areas that might benefit from digitization.
- Have multiple, detailed plans. Your CEO and CFO will want to see a budget that has hard numbers. Presenting them with a single plan containing a wide range of numbers will not win much support from them. If you see three options with different costs, fill in the blanks for all three plans. For example, if the project could cost $150,000, $600,000 or $1 million, prepare three detailed plans that show them what they get at the three different levels.
- Include a “slush fund.” No matter how well you fine-tune your budget, you are still basing it on the technology that is available in 2016. Long before 2017 ends, however, disruptive new technologies could appear. Should you need to make a mid-year adjustment to react to innovations, it will be much easier to tap your slush fund than it will be to reallocate funds.
The key to planning and budgeting for a successful digital transformation project is to keep your eyes on the final results. Take a holistic approach that includes understanding how innovative technologies can help your company achieve its goals. Following the above tips can allow to capitalize on opportunities in the new year.