The cost of digital transformation is lower than you think

Jacqueline Spence, Bridjr’s lead on business design and program delivery, breaks down how the cost of digital transformation can be quantified, measured, and optimized for success. This is her proven method to get digital transformation funded and innovation implemented.

Solve the root cause and find the path to fix the pain

I really love being a problem solver. Nothing in the business world beats that feeling of achievement when you get to the root cause of your pain—and you see the path to fix what’s causing this pain.

My journey has been an evolution from way back, (more years than I care to share!) working as a systems analyst, technical writer, business analyst, and project manager making sure that things (projects, programs, products, solutions, etc.) were delivered.

Then I pivoted into the strategy and architecture world. I’ve been lucky enough to be on some amazing teams at organizations that are blazing trails by defining strategies to align to corporate objectives that solve problems!

I’ve observed all organizational problem-solving starts with two fundamental questions:

  • What is the root cause of the pain?
  • How do we define a path to fix what’s causing the pain?

Next, objectives translate into strategies which translate into tactics that are rolled out as deliverables, or solutions. This is where the satisfaction comes in. Once they’re rolled out, though, the organization must adopt the solutions! Don’t forget that part. (But that’s a subject for another blog!)

Digital transformation implementation is fluid

I’ve seen the nature of transformation change. These days organizations outsource, then they insource, each group always looking to change and make better, leaner, and deliver higher value.

After watching these cycles of transformation implementation, what’s clear is that there isn’t one answer to address all pain points in an organization or department. The solution is fluid and will change. That’s the nature of living with the fourth dimension of time, right? Just realize that value in the right time cadence and you’ll be golden.

What are ecosystem benefits in transformation?

Innovation thinkers, pundits, and analyst types are talking about themes related to ecosystem benefits. These are quantifiable benefits that an organization can realize from transformation that are felt in multiple areas of the organization, enterprise, or ecosystem.

When transformation is done well in one group, the benefits and solutions can be realized in other groups by both functional improvement and financial measurement. We can calculate hard and soft benefits for more than one party, and this drives up the value of that investment. One of the great advantages of ecosystems is that they often can be curated to solve for real root cause organizational pain.

Why don’t we do this all the time? Well, we try to, really. Organizations are constantly putting programs into place to address this. Continuous improvement initiatives are an example. The challenge is that a continuous improvement team doesn’t usually take an approach that goes from objectives to strategies to tactics so it falls onto other department leads to make this happen for their groups.

The cost of transformation is lower than you think

The usual objection to starting this exercise is over how to finance the change. Organizations do want to fund transformation; it just hasn’t been properly quantified and assigned value. So, without further ado, here is the best practice method to find the funding to deliver transformation.

First, analyze your contracts and budget against the business capabilities they deliver. You can use simple logical approaches to find money you didn’t even realize existed because often, through all these cycles of expansion and outsourcing, and then the following reversals, we land in a place of fragmented sub-optimal systems.

I call this step contract architecture. It’s just looking at all the business activities you need to manage (for example, making payments, financial transactions, selling something, making something) and figuring out who delivers these services to or for your group.

Start with business capabilities. You may have a large enough enterprise architecture group that you already have business capabilities documented.

  1. Review these business capabilities and agree they are still valid (don’t skip this step!)
  2. Figure out who your actual providers are. That includes both external vendors and internal groups charging you for services.
  3. Create a business capability map. It’s what it sounds like: a picture showing what capabilities you need to manage.
  4. Here’s where it gets trickier, but it’s just detailed. Start to create a financial view of each capability. Which vendors are covering which elements? You will probably find that you have some bundled solutions.

Maybe the platform you use to share executive information is different from the platform you use to share internal information. Why? Are there real needs driving this? Maybe there are. Maybe there aren’t. Make some decisions and narrow your information sharing platform to one or two systems, make it leaner and cleaner. Ensure what you do is driven by needs, not just convenience and legacy investment.

Cost savings areas we typically see overlap:

  • Multiple point solutions
  • Multiple point solution vendors
  • Solutions that have bundled capabilities
  • Organizations that have transformed multiple times
  • Organizations that are going through rapid expansion or reduction of size
  • Departments where the mandate has changed

If you go through this process, you’ll find costs you can recover. 

You may be thinking, “Don’t we have a group to do that here? I thought architects and procurement people do this.” Yes, they do, but the reality is that people don’t have a line of sight to everything—all capabilities—all the time.

At one company where I was a consultant, we did this analysis and realized they had amazing cloud vendors who were providing many of the same capabilities. We were able to release about $250,000 per month by performing this reconciliation. That translates into millions on an annual budget.

You may not realize that much through this effort, but you can usually find something and that’s enough to fund innovation discovery, to learn where you have ecosystem benefits.

So, we’ve solved a few major challenges here, right? You can innovate, fund your innovation and grow ecosystem (or enterprise-level realization) of value. Next, let’s turn to the benefits of outside help.

Remove the politics with outside help

Bringing in someone external to do this exercise really helps you to navigate around the politics without being the person who’s presenting a negative view.

Life happens and businesses get messy. So, get someone to come in and help with the clean-up, you’ll find you have more money than you think.

Use this approach to find a few hundred thousand, invest in your group, and allow that investment to benefit your whole organization. You’ll be a hero!