Budgets are integral to the success of any project, but the planning of a budget totally depends on the resources at hand. However, traditional business budgets are what a lot of brands are used to. This may come as a routine; even IT budgets have become almost commonplace; hence, there may be a need for proper due diligence if there is a need for a special budget.
The business world has undergone a lot of upheavals in recent years, especially with the COVID-19 pandemic. As a result, things are no longer the same, businesses are going through many changes, and the time has come for any brand that wants to remain relevant to innovate.
For instance, AI that has come as technological innovation is continuously growing. It can transform potential leads into qualified customers faster and with more ease and efficiency.
To ensure that a brand can survive the competition, the bandwagon effect is digital transformation. Incidentally, digital transformation initiatives do not come easy. You must invest time and money if you want to reap any dividend from your effort.
But, digital transformation projects are not just there for the picking. Statista reports that the estimates for direct investments into digital transformation will reach a total of 7.8 trillion U.S. dollars between 202 and 2024.
The result is that you will enhance improved customer experience, improved productivity, save costs, and ultimately generate more ROI. How do you think you can achieve this without data, funds, and a concrete plan?
What is digital transformation?
Digital transformation can be defined as any transitional effort that enables a business to adopt digital technology, digital business practices, and digital culture. However, digital transformation is not something you can dabble into without enough planning.
Before trying out any project, you must have the budget for it, unlike traditional IT or ordinary business budget planning. Your ordinary budget stems from what you had in the previous year’s operational and capital budgets; all you can do is make a case for additional funding.
After some deliberations, the percentage increase or decrease is approved. You don’t consider many unknowns; the employee counts are stable, and you generally plan upgrades and replacements for several years.
In the digital transformation budget, every project is different, and there are high expectations for ROI. Also, most of the initiatives are completely new, which raises a cause for policy-makers to deliberate seriously upon.
The following are four factors you must consider before budgeting for a digital transformation project.
1. Determine your project goal
What does your digital transformation project aim to achieve? How important is it to the organization? How will it improve customer experience? What will the employees benefit from it? Do you have success metrics to back up your case?
These are points you must focus on before thinking of budgeting. Without a clear set-out goal in mind, you may fail in the end. This is also instrumental to how successful you are in convincing those in charge of the budget.
To have a strong business case, you must put in enough resources; the time frame to carry out excellent research should be between three and 18 months, depending on the size of your organization. Your research should also include quotes from different sources for comparison.
Apart from these, there is the need to set a fixed time for the possible completion of the project. A clear picture of your organization’s looks and how your project will transform will help in tilting the scale in your favor when presenting your budget for approval.
2. Map out the project and executors
What project do you have in mind? Who will execute the project? If you don’t have these basics, it may not be easy to convince decision-makers of funds. And without funds, your project is dead on arrival.
Depending on the organization’s size, you may have many projects to execute; priority will be given to the project with the best presentation. You, therefore, need to know what will trigger the interest of the decision-makers.
It’s also crucial to have the right set of people, those who understand the project, as their technological input will be necessary to tilt the scale in your favor when you have to convince the organization’s decision-makers. When selecting your transformation team, you must endeavor to pick people with a good track record; if you don’t have such within the organization, there is no reason you cannot outsource to service providers.
To have a resourceful digital transformation team, you must cultivate the members from the beginning; it will help the process if you have a plan that can include bonuses and allowances for your budget.
3. Identify those in charge of the budget
Depending on how your organization funds projects, you may need to identify those in charge of releasing funds. For example, there may be a central body that controls your digital transformation budget; on the other hand, the budget for transformation projects may be distributed among departmental budgets.
Knowing where you source for your budget and those in charge makes your work easier. In some instances, you may even have a situation where your organization does not have a specific digital transformation budget but funds set aside for miscellaneous spending.
The most important thing is to know who and where to reach out for funds to execute your project.
You may not be completely sure of everything until your digital transformation project kicks off, so you must have a provision for eventualities. Flexibility is important when building your budget; if your project is completed in a short time, you may be more accurate with your estimates, taking into consideration that the market forces can alter figures at any point.
There are also conditions and policies from regulating authorities that you may not influence; all these must be considered for long-term projects. The success or failure of one project will impact the next.
While this may not be exhaustive, these four factors will put your brand in good stead for a successful digital transformation budget. You may have to look into other areas, such as how to market the project’s value and success metrics to solidify your budget.
User awareness is very vital and must be handled with expertise. In addition, your marketing team must be carried along throughout the planning stage.
The ultimate success of your budget rests on how employees tune in to the project and how it will increase customer experience.