With so many different moving parts, digital transformation projects require a rock-solid foundation from which to build - including a budget that accurately reflects the scale and complexity of the initiative, while remaining achievable and realistic.<\/p>\n
However defining such a budget - not to mention getting it signed off - can be challenging. We\u2019ve all heard the horror stories of projects going over budget, stalling, or even being abandoned altogether.<\/p>\n
If you\u2019re currently in the early stages of your digital transformation journey and want to avoid a similar fate, this post shares practical tips to put you on the right path from the start, covering some of the key considerations you\u2019ll need to address to ensure your budget truly supports your organizational requirements and strategic goals.<\/p>\n
Download our Business Resource \u2013 Business case template<\/strong><\/p>\n this 18-page e-book will help you create and build the case for investment from senior management..<\/p>\n Access the Business case template<\/a><\/p>\n <\/div>\n <\/div><\/span><\/p>\n You can\u2019t involve everyone <\/em>from across your organization in your budgeting process, and nor would you want to. However, where digital transformation is concerned it\u2019s important to consider alternatives to those traditional budgeting approaches that have typically been managed on a departmental basis, with the financial director approving a high-level budget that is then distributed across the team.<\/p>\n These models simply aren\u2019t viable today, when digital stretches across different departments, roles, and locations to touch all parts of the enterprise. Instead, the ubiquitous nature of digital calls for a collaborative approach that facilitates an overarching understanding of core business processes, to ensure that every element of these is factored into your budget. Without this holistic picture, you run the risk of creating bottlenecks that will draw investment down and away from the revenue-generating activities that matter.<\/p>\n Alongside the disparate requirements of the different business functions within your organization, there are almost certainly going to be additional areas that will need to be accommodated in your digital transformation budget. These can be easily overlooked, so be sure to undertake rigorous requirements gathering activities to uncover any supplementary demands.<\/p>\n For example, consider the following:<\/p>\n Infrastructure<\/strong>. How will your digital solutions be supported?<\/p>\n \u2026 and not forgetting the costs associated with your requirements gathering activities themselves!<\/p>\n As mentioned in the introduction to this post, defining your budget is only part of the battle. You\u2019ll also have to secure sign-off, meaning that those individuals in control of the purse strings need to be bought into your vision. It\u2019s crucial therefore that you raise awareness of the need for - and benefits of - digital transformation at an early stage.<\/p>\n Even if you think this is already understood across your organization, it often isn\u2019t the case. Indeed, as budgets are typically agreed in advance without any understanding of the complexity or dependencies involved it\u2019s easy to assume<\/em> a shared vision at the outset, only to find out further down the line that you don\u2019t have the resources you need to move as quickly as you\u2019d like, or achieve your desired results.<\/p>\n A dedicated \u2018discovery\u2019 phase can help you more clearly articulate your vision, and so communicate this to stakeholders - particularly if it includes the creation of low-fidelity deliverables such as prototypes and proofs of concept, which allow you demonstrate your ideas and objectives in a highly visual way, and provide increased confidence to help secure buy-in.<\/p>\n The key driver behind any digital transformation project should be to deliver value<\/u>. If you focus solely on the features you want to be delivered without thinking about how they serve your overall vision, the project is unlikely to deliver the results you\u2019re after. As you define your budget, then, think about the precise reasons why you want to undertake the work you\u2019re planning.<\/p>\n This will not only help you justify your budget by providing specific examples of the benefits you aim to realize that you can reference - for example, streamlined processes, higher revenues, or a larger user base - but will provide a valuable baseline against which you can measure the success of your initiatives, and so inform any future programs of work and their associated budgets.<\/p>\n If you\u2019re undertaking a digital transformation project, you\u2019re no doubt very aware of the rapid rate of change being driven by technological advances and changing user behaviors. But is your budget also flexible and fluid enough to allow you to capitalize on new trends and market conditions in a timely fashion?<\/p>\n While many organizations have embraced more agile ways of working in their operational processes, the commercial elements of a project typically still follow more traditional approaches and areas such often focused on fixed cost, defined requirements, annual cycles, and allocated spend. It\u2019s clear that a change in mindset is required to deliver the greatest possible value from your digital transformation initiatives - and the following tips explore in more detail some of the ways that this can be achieved.<\/p>\n While strict budget plans may offer high levels of predictability, they can seriously impact your ability to respond to change, and so leave you at risk of being overtaken in your digital transformation efforts by nimbler and leaner competitors. However, when introducing increased flexibility you\u2019ll still need to provide the governance required by those allocating budget, who will be unlikely to want to relinquish control altogether.<\/p>\n One way to achieve a balance between these competing demands is to adopt a model that budgets for \u2018epics\u2019 (large, overarching projects) while moving the responsibility of more granular decisions away from budget holders towards those with a closer working knowledge of individual initiatives.<\/p>\n The very structure of your budgets can also be adapted, to give you a closer steer to reality. As the rate of change in the digital landscape continues to outpace traditional annual budget cycles, some organizations are choosing to plan two six-month budgets instead - increasing the frequency with which they can assess project deliverables and monitor the market for potential opportunities. This allows the budget to be more quickly reinvested in productive areas, and be halted where value isn\u2019t being realized, to minimize waste and accelerate the rate of returns.<\/p>\n Another way of supporting change while still keeping budgets under control is to invest in dedicated \u2018innovation\u2019 projects. Offering the opportunity to try out new ideas on specific parts of the wider transformation piece, this kind of initiative allow you to prove the business case in a low-risk environment, and get a feel for the challenges and benefits associated with a project before committing significant resource.<\/p>\n You might also want to include a dedicated Research and Development (R&D) line in your budget, using this to explore various opportunities for innovation and disruption outside of the stricter frameworks and processes you may have in place elsewhere. By removing unnecessary overhead you can reap the rewards of increased velocity, and the first-mover status that often comes with this.<\/p>\n Discover more blogs and ways to kickstart your organization's digital transformation strategy with actionable, practical online learning that gets results, fast!<\/p>See More<\/a><\/div> Perhaps the most important thing to remember when budgeting for digital transformation is that it isn\u2019t a single, distinct piece of work, but an on-going journey. While you likely won\u2019t (and probably shouldn\u2019t) try to capitalize on each new trend and technology that emerges, you will need to ensure your strategic roadmap aligns with the latest conditions and priorities, and have the necessary resources in place to execute this.<\/p>\n Adopting an iterative approach that encourages continuous improvement can prove extremely beneficial here. By focusing on regular deliveries and short feedback loops, this way of working will provide you with a model that\u2019s ideally suited to the complex and evolutionary nature of digital transformation, which can then be adapted and extended beyond the initial launch to ensure you continue to deliver value at every stage of your journey.<\/p>\n Achieving your digital transformation aims is not a quick or easy process, but instead requires a coordinated, long-term strategy. However, by putting an appropriately scoped and managed budget in place you\u2019ll help set yourself up for success at the outset and support a shift in mindset that will help ensure your investment is targeted where it will deliver the greatest benefits at each stage of your journey. Just remember to keep it up!<\/p>\n
\n <\/a>\n <\/div>\n 8 tips for your digital transformation budget:<\/h3>\n
1. Involve everyone<\/h3>\n
2. Consider potential \u2018hidden\u2019 costs<\/h3>\n
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![\"digital](\"http:\/\/www.smartinsights.com\/wp-content\/uploads\/2017\/08\/digital-transformation-budget-550x367.png\")
<\/a><\/p>\n3. Create a shared vision<\/h3>\n
4. Demonstrate value<\/h3>\n
5. Facilitate agility<\/h3>\n
6. Support change where required<\/h3>\n
7. Allow for innovation<\/h3>\n
Digital strategy in a time of crisis <\/h3>
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<\/div><\/span><\/p>\n8. Keep it going!<\/h3>\n
In summary<\/h3>\n