Budgeting for Digital Transformation

Posted on October 4, 2018

calculator-227654_640Today’s customers are demanding change. Opportunities to impact the customer experience using digital solutions exist throughout organizations. While these digital components can have a positive impact on customer behavior and business operations, it is also difficult to get started, define activities, and allocate budget.

Creating a standard definition of digital transformation has proven to be challenging at most organizations. Every stakeholder might define it differently and seek unique, sometimes competing, goals. For some, digital transformation is as simple as developing a new mobile application or implementing a customer engagement tool. For others, digital transformation is an enterprise-wide effort to rebuild competitive advantages. Before beginning the journey or developing budgets, it is essential to have clearly defined processes and goals shared among the team.

Organizational leaders must spend time reviewing digital trends, how the business is affected by those trends, and the foundations needed to support a transition. They are better able to define the goals and demystify the process by considering all the facets of the digital world.

Digital transformation occurs when digital technology changes the way a business operates particularly around customer interactions and the way company agents create value. A digital transformation isn’t a single effort. It is a portfolio of initiatives that combine into a scalable change.

After leaders consider these elements, they begin to understand the impact, feasibility, and budget required for each initiative. With this information, they see a clearer picture of how digital transformation might impact the business and how to remain competitive in the digital landscape.

Even organizations with large budgets allocated to digital transformation will likely experience budget constraints that may limit some or all of the process. It is essential to be aware of and prepared for budgetary challenges.

While digital transformation requires new investments in the company, people, and customers, it is not a race. A well-built strategy uses the budget as a reality check to plan phases and objectives. The plan can be spread out over several years if that is what is necessary.

Furthermore, a keen assessment of potential and actual ROI helps businesses determine the best allocation of budget. When business leaders hold technology, people, and processes to a high success standard, enterprises see a positive return on the investment in digital transformation.

Leading venture capitalists and digitally-minded leaders focus on KPIs to identify the potential ROI of an initiative throughout the implementation and use. If even early-stage KPIs fail to move in the right direction, they assess the reasons and decide to either sunset the effort or pump more resources into it to make it successful. The decisions don’t hinge on a three- to five-year business plan but take into account short-term milestones.

Digital transformation is imperative to the success of today’s businesses. However, the budget plays a significant role in determining the priority and timeframe of each initiative. Utilizing early stage KPIs as a benchmark, business leaders are better able to identify areas with the most significant potential and adequately fund them as needed.

To learn more about digital transformation check out the Digital Transformation Roadmap.

Download the Digital Transformation Roadmap

This entry was posted in customer experience, technology, today's customers, customer engagement, digital transformation

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