November 14, 2016

Budgeting for a Digital Future

“Every business is, willingly or unwillingly, a competitor on a software playing field, no matter which sector it’s in.” Vijay Gurbaxani, Founding Director of the Center for Digital Transformation (CDT), Harvard Business Review

This quote is very appropriate for companies today because it’s hard to talk about a business without talking about its digital strategy which, like it or not, has become a business necessity.

In a recent survey 72% of business leaders said supporting a digital business model is critical or very important for business (up from 65% a year ago).

Investing in digital businesses of tomorrow

The rubber hits the road at budget time when businesses start to allocate dollars for the IT initiatives that will help support a more digital future.

Today, this process is made more difficult by a quickly evolving business environment and the rapid pace of technological change, which are in many cases conspiring to the shrink the planning horizon to months or at most a year from the more comfortable three to five year cycles of the past.

That said, there are a few questions you should be asking at budget time:

  • Have you articulated what your business needs to achieve next year, three years and even five years down the road (which is still an important exercise in spite of the shrinking planning horizon)?
  • Have you thought about the role technology will play in helping you get there?

Budget time is a good time to look to the future and define both short and long-term business goals, while identifying the key technologies needed to realize those objectives (such as the ones I’ll talk about shortly).

Mapping Out ‘Must Haves’

Take time at the outset to map out all the “must haves” necessary to achieve your plan.  It’s also important to identify the critical elements of any new initiative or project to avoid costly overruns and keep scope creep at bay as you roll out the solutions.

Things to keep in mind while budgeting for IT projects:

  1. SET PRIORITIES & GET EXECUTIVE BUY-IN: You simply can’t do it all!  No one can.  Before heading into any new budget cycle, it is imperative that a list of priorities is established and is supported across the executive leadership team.  Executive buy-in on key priorities will make it much easier to set appropriate budget levels for each project.  When consulted and fully bought into the plan, these same leaders may pleasantly surprise you by finding additional funds to address previously unforeseen critical needs and cover any possible budgetary shortfalls.
  2. IT’S NOT ALL OR NOTHING: With a bunch of IT priorities, it’s tempting to put a little bit in each pot, but this approach can result in lackluster performance and could end up costing more in the long run if the cost-effective solution you rolled out never fully aligned to the objectives or won’t scale to meet growing needs.
  3. TAKE A FOCUSED APPROACH: Look at the end goal for each IT investment you are considering before allocating funds to support it. Tackle one initiative fully before moving on the next priority.
  4. LOOK BEYOND A SINGLE BUDGET CYCLE: IT is and should be a long-term solution not a band-aid. You’ll find your results improve when you take the long view while keeping an eye on future needs and trends.
  5. PLAN FOR SURPRISES: In any IT budget, make sure you have contingencies built in for hardware failures and technology purchases or upgrades, as well as for implementations whose scope expands once you get started. A good budget, quite often, has some flexibility built in.

Technologies to watch

No matter what your current priorities, there are some technologies that need to be on everyone’s radar:

  • Cloud remains a top business productivity tool helping companies to improve collaboration and mobile access while helping to increase security when proper implementation steps are taken.
  • A mobile-first strategy is a must as desktop and laptop use continues to decline. Making sure both internal and external facing tools are readily accessible from traditional and mobile devices should be top of mind
  • Boosting web presence, harnessing SEO and dedicating time to increasing your social media profile are all important tools to help you connect with B2B and B2C customers. If you haven’t started, you need to.
  • In all endeavors, security needs to be front and centre as data breaches and privacy protection issues continue to make headlines.
  • IoT and machine-to-machine learning are reaching mainstream as sensors are more prevalent and able to deliver actionable data that can automate functions, save time and increase efficiency.
  • By 2020 30% of web browsing sessions will be done without a screen which means companies need to start adding voice communication to their business and technology solutions.

Experience has demonstrated it is important to consult the experts when creating a technology plan and the associated IT budget.  Expert advice will help you generate a well-rounded plan built on a solid set of assumptions designed to meet your business goals, while the absence of expert advice may leave you exposed to incorrect and inaccurate assumptions which could be costly in the long run. Wherever your priorities lie, the experienced team at Whitecap can help you evaluate your options and help you budget for the year(s) ahead.