Don’t let finances be the deciding factor in your company’s digital transformation.
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Thanks to COVID-19, the rate of digital transformation is moving faster than ever before. However, the fact that there’s a higher demand for technological integration doesn’t automatically put money into companies’ accounts. In fact, in many businesses, budgets are tighter than ever as consumers try to navigate a shakier economy and pandemic restrictions. If you don’t have a lot of cash, how can you still make an effective digital shift that benefits your business for the long haul?
How the IT budget looks in everyday operations
The increased conflict between companies’ budgets and IT projects is visible in multiple operational areas. According to a survey from Apptio, there’s a growing push for IT teams to do more with less money, with 63 percent of respondents saying that their demand for new IT capabilities has increased even as there’s pressure not to spend.
Related: Does Your Business Need a Digital Transformation?
The majority of CIOs (72 percent) also say that the pandemic has shifted their priorities. Trimming costs now beats operational excellence and revenue growth in terms of priorities.
Lastly, because there’s still so much uncertainty with the pandemic, quarterly forecasts don’t cut it. CIOs have to respond and plan faster, with 76 percent saying that the ability to replan rapidly is a critical capability.
Related: What Small Businesses Need to Know About Digital Transformation and Disruption
The false belief about big change
Within this new reality, the common belief that digital transformation will always involve a massive adjustment to your business model, large investments, or abandoning physical channels in favor of virtual ones is not always accurate. More often than not, digital disruption is an incremental process, with small changes delivering a high overall value proposition over time.
Take digital sales and service delivery as an example of smaller shifts companies have faced during the pandemic. In many cases, companies already allowed customers to pay virtually or use touchless card readers. Since the pandemic, they’ve made contactless methods easier and more prominent. In the same way, customers might already have visited the company website to purchase online. But businesses expanded the number of products in their digital stores, and they began to offer curbside pickup and delivery options. None of these shifts required major modifications to the companies’ business models. Instead, they built on the existing infrastructure and tools — which dramatically increased convenience for the customer.
Achieving your digital transformation requires a coordinated, long-term strategy. Adopting an iterative approach that encourages continuous improvement can be beneficial. Understanding that it’s not always necessary to make radical modifications for a big impact, business leaders have three major ways to balance IT progress and budget constraints.
- Assess. Multiple companies are developing frameworks that can help you look at your IT budget against different business situations, such as severe drops in demand. In Forrester’s model, there are three modes: survival, adaptive, and growth. The challenges and key concerns in each mode are distinct, so the amount of budgetary flexibility varies. Those in survival mode, for example, should aim for cuts of 30 percent or more, while those in adaptive mode should cut just 10 percent. Having a framework like this can make it easier to determine whether your decisions are reasonable and ensure you have a clear target to aim for.
- Focus. You’ll always have projects you could pursue. But which ones really align with your business goals? To cut spending and ensure you can build on the momentum from your assessment shifts, hone in only on what’s strategic and brings higher value or allows you to stay competitive in your industry.
- Explore innovative funding choices. Yes, there are traditional funding options, but accomplishing digital transformation on a tight budget will likely require you to get more creative. Try to find projects that will pay for themselves over time or identify projects that enable growth, drive efficiency or create better products, services and experiences for the customers. The very structure of the budgets can also be adapted. Some organizations choose two 6 months cycles to allow the budget to be more quickly diverted to priority areas and be stopped where value isn’t being realized.
A focus on the outcomes gets you back on top
As you examine your IT needs and financials, don’t make the mistake of changing to change or thinking that making a change is instantaneously better than doing nothing. Any shift has to have a clear “why” behind it. You have to know what outcome you’re driving for, or it’s easy to latch onto shifts that aren’t effective. Keep this at the front of your mind as you follow the three strategies above, and you’ll be in good shape to adapt digitally in a way that truly makes competitive sense for your unique business.
Related: 5 Ways Good Leaders Can Digitally Disrupt