You’ve just found out a competitor has been given the go-ahead to spend £20m on delivering a large-scale IT project. But you don’t have that luxury. You haven’t even got a quarter of that.
So, does this spell game over? Are they about to dominate the market and leave you in the dust? Not necessary because when it comes to IT budgets, bigger isn’t always better.
As IT systems become an important competitive element across almost every industry, technology projects are getting larger, touching more areas of the organisation, and subsequently, posing a risk to the company if something goes wrong. Unfortunately, quite often, things do go wrong. A recent research project carried out by Mckinsey and Oxford University found that half of all large IT projects (defined as those with an initial price tag of £15m) massively blow their budget while 7% are not delivered on time and go on to deliver 56% less value than predicted.
Thankfully, in the future, large scale IT projects may become less common thanks to the cultural shift in how we approach innovation. Innovation is of course, the driving force behind digital transformation and in 2019, it couldn’t be higher up CIO’s agendas. According to the 2018 State of the CIO survey, 90% of IT leaders said they are beginning to focus more heavily on digital initiatives and innovation. Dig a little deeper into the study, and you’ll find that 37% of the top IT heads point to innovation as a way to identify which parts of the business can be transformed using digital technologies.
This isn’t to say CIOs have never strived for innovation in the past, it’s quite the opposite, IT projects over the last decade have aimed to innovate to the max, whereas today’s initiatives are more likely to be more modest and lean toward innovating with intent. A lot of the smart budget money will be spent on projects that are framed with a more thoughtful and even surgical approach to innovation and it’s these smaller, more pragmatic projects which carry a better chance of success.
Traditionally, small IT budgets have been considered a constraint or barrier, but a gift. Pradip Sitaram, SV an CIO at Enterprise Community partners, said: “if you have constraints, you’re forced to think outside of the box, to think innovatively and say, ‘How can I best make use of the limited resources I have in time, money and people to come up with good solutions.’
To encourage, foster, and sustain an innovation culture, organisations and executives must understand and accept that every experiment will not succeed; every innovation exercise will not result in a revenue generating product or operating efficiencies, Pradip points out, adding that you will likely fail more than you succeed. Every exercise will deliver valuable learnings.
But as long as there is a culture that accepts that it’s ok to test and learn, to fail fast and learn quick, then teams will be more likely to venture out of their safe zone and the magic can happen.
In addition to this, people, in general, have a different posture and cultural understanding of technology and what it can do, since it saturates their public and private lives. Years ago, conversations on technology adoption and use around the topic might have centred on the impact — good or bad — on a person’s life or continued employment. Today, it is all about leveraging technology in small and incremental ways, whether it is cyber banking, online shopping, or eliminating a tedious back office process.
Small projects can also yield significant changes in the customer and employee experience. Access to a basic service such as capturing expenses in a mobile app makes employees more efficient. Mobile access to even a small subset of data can make employees happier and deliver better customer experiences. For example, easy access to current inventory saves a retail store clerk time and delights the customer by serving them immediately.
While it’s still essential to have a multi-year strategic plan for digital transformation, it’s just as important to have a set of well-defined, smaller efforts that support key performance indicators today while fueling a longer-term transition to right-time experiences. A successful digital transformation strategy is a set of projects that are:
Instead of boiling the ocean with a large complex multi-year transformation effort, business and IT leaders can start now by designing a set of use cases that improve a business process or workflow with context. For example, this could be adding location tracking to an asset or integrating weather data into a supply chain application to predict delays in material shipments. These use cases should be small enough to complete in a reasonable time-frame.
2. Matched to a business objective
In addition to being a focused project, early digital transformation efforts should support one of the company’s key business goals for the year. For example, a global telecom provider may have a goal to improve its Net Promoter Score (NPS). The overall digital transformation strategy could suggest updating to a new suite of customer support systems. The service provider may start by defining which issues create the highest dissatisfaction such as contact centre support and billing concerns. Once these issues are identified, the service provider may design a plan to upgrade the billing system in one country with the goal of testing both the technology and how it impacts the key performance indicators (KPIs)
3. Measurable in business value
Investments aren’t free flowing in any organisation. Companies need to find a way to measure the success of the investment. It may have a financial return from lowering costs or increasing revenue. However, it may also be measured in softer terms, such increased engagement. An estimated return on investment is even more important when companies are testing how the latest technologies such as machine learning and virtual reality might impact the enterprise. No one wants to spend money on a cool project that looked interesting but delivered a minimal return. For example, proof of concepts that highlight how various technologies work aren’t worth doing. A POC must be used to solve a business problem such as using augmented reality to reduce the time it takes a technician to repair an HVAC system by 10% or to eliminate the need to send two technicians to a job site.
4. Sponsored by an executive
Digital transformation can’t be achieved in a silo; it must be integrated across the organisation. While your team might think a project is crucial for the company’s long-term viability, the team still needs executive support to drive funding, internal adoption and collaboration across various groups.
Digital transformation is often cited as a long journey but that doesn’t mean you can’t create meaningful impacts today – one project at a time.