While “digital transformation” may seem like the latest corporate buzzword, it’s actually an essential process most companies will need to undertake to survive in the modern economy. After all, finding ways to improve efficiency and lower costs is a concept as old as business itself—and today, the best way to do that is usually through technology.
Still, a company’s big ambitions for digital transformation aren’t always matched by an equally big budget. In these cases, tech leaders must take the lead role in establishing essential objectives, determining costs and deciding what to do first.
Digital transformation on a budget can be a challenging task in the face of competing priorities and the input of multiple stakeholders. To help tech leaders faced with developing a workable, affordable plan, the industry experts of Forbes Technology Council have shared strategic approaches for achieving needed digital transformation initiatives on a limited budget
- Get The Team’s Input On Costs And Effort
Bring the team together to estimate the costs of projects prior to the “sale.” When your team works from day one on managing client and team expectations, collective ownership is the result. Voting together on the complexity of and the level of effort needed for what you’re about to build forces discussion and negotiation. In the end, each person feels that they have contributed meaningfully and that they have a stake in the project’s success.
- Conduct An Impact Analysis
Establish scope prioritization via a governance council. Once the charter for digital transformation has been defined by engaging with the key stakeholders, it is of paramount importance to prioritize the scope using an impact assessment matrix. Clear impact analysis allows tech execs to get stakeholder buy-in and also establishes the risk associated with too narrow or too broad a scope.
- Break The Journey Into Measurable Milestones
A company’s digital transformation journey should be broken into measurable, achievable milestones. This provides executives with a clear vision on what to spend to achieve their goals, to show progress and to continue to move the business forward. Digital transformation is not an instant deliverable; it is a strategic direction and should be treated as a series of achievements in a company’s evolution.
- Leverage ‘Off The Shelf’ Solutions
Tech execs can use “off the shelf” products for features that it doesn’t make sense for the team to build right now. For example, we used a text messaging platform inside our system because that wasn’t going to make a material difference in achieving our goals. We built the features to achieve the end product of matching nurses to hospitals and for solving credentialing issues, which were our biggest pain points.
- Identify New Tech That Can Reduce Costs And Boost Efficiency
Transformations are often opportunities to change long-established ways of working. Sometimes they align well with modernizing old systems and consolidating to newer platforms that drive higher value and efficiency. Use the cover of a transformation to push people outside of their change comfort zone, drive the adoption of new technologies that reduce overall costs and sunset obsolete tech.
- Take On Fewer Initiatives, And Do Them Well
PowerPoint slides won’t get you to digital transformation, so we need to put our money where our mouth is. That is not always easy, but without a budget, we are selling a pipe dream. We need to align at the senior executive level to ensure sufficient funds are allocated based on a shared understanding, and we need to pick fewer initiatives and implement them well instead of taking on too much.
- Evaluate The Impact Of Not Making An Investment
A lot of digital transformation technologies are foundational building blocks for the growth of a company. So it is critical to evaluate not only the business value of an investment but also the impact of not making the investment. To make something a “must-have,” you need to clearly articulate the business value and lay out the different use cases and the associated ROI that can be achieved by implementing the technology.
- Pinpoint Use Cases That Have A High Impact On Desired Outcomes
Identify use cases having a material impact on business outcomes. Understand existing processes from business leaders’ perspectives and prioritize high-ROI use cases. Using these as the foundation of your digital transformation roadmap, choose a single use case and make it work by proving ROI and business impact. Then scale the program after understanding how to achieve business success within your organization.
- Break The Project Down To Facilitate Compromise
An effective approach is to define a clear ROI and break the project into bite-sized, prioritized components. The budget level comes down to how much money is available and how quickly the spend will accomplish the desired result, so breaking a project down into bite-sized, prioritized components allows for compromise if it cannot be fully funded. Your ROI has to beat out other internal competition.
- Tap Into The Knowledge Of New Talent
Listen to the new talent coming into the company. Often, tech leaders will prioritize what is easy to do or what can gain internal buy-in. Instead, execs should spend more time listening to the workforce entering the company. Generally speaking, new talent brings in a need and desire to operate at a higher velocity, which creates a reliable blueprint for operating efficiently in the digital era.
- Look For Ways To Spread Out Or Defray Costs
Collaborate and create joint initiatives with the business teams that will directly benefit from the transformation. Approach prioritization by focusing on low-cost/high-value projects, and take a closer look at spreading out the software costs that come with digital transformation scaling. Finally, invite SI partners to participate in success-based payments to cover a portion of the costs.
- Ensure Your Initiatives Are Aligned With Overall Strategic Objectives
One of the key strategies is the alignment of goals and objectives. You must ensure that the selected IT initiatives for the coming year are 100% in alignment with the organization’s overall strategic objectives. CIOs need to be aligned with where the company is at a given point in time.
- Keep Maintenance Costs In Mind
Most IT projects—especially those that require building apps—require a “lifetime funding” approach. A hallmark mistake in budgeting is to assume the project is done when the app goes live, when that’s just the start. Think of every tech asset as a baby: You create it and must nurture it for the remainder of its life.
- Segregate External And Internal Initiatives
Segregating digital initiatives that offer internal productivity gains from those focused on product/service innovation will help companies ensure that one initiative doesn’t eat up the budget of another and will enable prioritization within specific focus areas. An agile foundation is also critical—specifically, cloud infrastructure, converting IT capabilities into consumable services and making data easily accessible.
- Gamify The Ideation Process
It’s never easy to drive digital transformation. The easy path for many is to “do it the way we have always done it!” Orchestrating innovation sessions and/or contests can drive individuals and groups to think differently and can get employees participating in ideation for tech and process advancement. With no major budget hit, the outcomes of the ideas can be game-changers.
- Explain The Risk Or Opportunity Each Initiative Is Addressing
When it comes to budgeting, people speak in “dollars” and “risks.” The most sensible approach to keep the budgeting committee on point is to break the strategy down into various initiatives and demonstrate to the team the risk each initiative is addressing or the business opportunity it is enabling. This approach helps organizations prioritize initiatives and focus on the most important ones.
Read the article on Forbes.com