Don't let finance be the deciding factor in your company's digital transformation.
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Thanks to COVID-19, the speed of digital transformation is moving faster than ever before. However, the fact that there is greater demand for technology integration does not automatically add money to corporate accounts. In fact, many businesses are on tighter budgets than ever as consumers try to navigate a shakier economy and pandemic restrictions. If you don't have a lot of money, how can you still make an effective digital shift that will benefit your business in the long run?
What the IT budget looks like in day-to-day operations
The increasing conflict between corporate budgets and IT projects is visible in several operational areas. According to a survey by Apptio, IT teams are increasingly pushed to do more with less money. 63 percent of respondents said their demand for new IT features has increased despite the pressure not to spend.
Related: Does Your Company Need Digital Transformation?
The majority of CIOs (72 percent) say the pandemic has shifted their priorities. The cost reduction now outperforms operational excellence and revenue growth related to priorities.
With the pandemic still so uncertain, quarterly forecasting will not cut them down. CIOs need to react and plan faster. 76 percent say the ability to reschedule quickly is an important skill.
Related Topics: What Small Businesses Need To Know About Digital Transformation And Disruption
The wrong belief in big changes
In this new reality, the general belief that digital transformation always entails massive adjustments to your business model, large investments, or the abandonment of physical channels in favor of virtual ones is not always true. For the most part, digital disruption is an incremental process, with small changes over time delivering a high overall value proposition.
Take digital sales and service delivery as an example of the smaller shift businesses faced during the pandemic. In many cases, companies have already allowed customers to pay virtually or use contactless card readers. Since the pandemic, they have made contactless methods easier and better known. In the same way, customers may have already visited the company's website to shop online. However, the companies expanded the number of products in their digital stores and offered roadside pickup and delivery options. None of these shifts required significant changes in companies' business models. Instead, they built on the existing infrastructure and tools – which dramatically increased the convenience for the customer.
A coordinated, long-term strategy is required to achieve your digital transformation. An iterative approach that encourages continuous improvement can be beneficial. Aware that it isn't always necessary to make radical changes to make a big impact, business leaders have three key ways to balance IT advancement and budget constraints.
Judge. Several companies are developing frameworks that you can use to review your IT budget based on various business situations, such as a sharp drop in demand. There are three modes in Forrester's model: survival, adaptation, and growth. The challenges and main concerns in each mode are different, so budget flexibility is different. For example, those in survival mode should aim for cuts of 30 percent or more, while those in adaptive mode should only cut 10 percent. With such a framework, it will be easier for you to determine whether your decisions are appropriate and to ensure that you have a clear goal to aim for. You will always have projects to pursue. But which ones really align with your business goals? To cut expenses and ensure that you can build on the momentum of your valuation shifts, just focus on the strategic aspects and get more value or stay competitive in your industry. Discover innovative financing options. Yes, there are traditional funding options, but to do a digital transformation on a tight budget you will likely need to get more creative. Try to find projects that will pay for themselves over time, or identify projects that will enable growth, increase efficiency, or create better products, services and experiences for customers. The structure of the budget can also be adjusted. Some organizations choose two 6 month cycles so that the budget can be redirected more quickly to priority areas and stopping where there is no value.
If you focus on the results you are back on top
When reviewing your IT needs and finances, don't make the mistake of switching to a change or thinking that a change is immediately better than doing nothing. Each shift must have a clear “why”. You need to know what result you are driving for or it will be easy to cling to layers that are ineffective. Keep this in mind as you follow the three strategies above and you will be in good shape to digitally adapt in a way that is truly competitive for your unique business.
Related: 5 Ways Good Leaders Can Disrupt Digitally