Myth Busters: Digital ≠ Expensive

There are many memorable math calculations but here's one more: D≠E or “Digital does not equal expensive.” As with most math problems, we will need to set up the proof to show why. But even during volatile economic times, you can plan for IT expenditures and not break the bank. This blog is the first in a series titled “Myth Busters” examining common misperceptions and dialing in on current reality.

The Origin of Expensive Digital Transformations

It is true that some companies spend millions of dollars on digital transformations. Sometimes these companies are so far behind the digital curve that a larger investment is necessary to survive. And other times, companies operate in digitally mature environments where spending is required to maintain competitive advantage. But aside from these book end examples, many companies can transform digitally for reasonable investment levels if they plan well. 

The two greatest digital expenses are often people and systems costs. They are the people costs of leadership and management time to spearhead and execute initiatives, as well as the training costs for associates who must adopt to new ways of working. They are also the system costs of new technology implementations and service agreements as well as the costs of integrations and ongoing maintenance. 

Some companies, faced with overwhelming complexities, choose to do nothing at all. This alternative could create a range of outcomes: lost business, the turnover of talent, and in some cases, the loss of business equity. Sometimes leaders say, "We know the B2B world continues to shift toward digital and automated solutions, but we just need to know how much and where to spend."  And so, people and systems costs are a natural place to start. 

Cost Savings from Systems and People Management

The buckets of cost savings range from "big thinking" to "implementation excellence" and it's usually a combination. And in our experience, the systems and people costs are often intertwined. 

Some companies need to better tie digital projects directly to their objectives.  When companies show value from digital investments and how offline and online activities contribute to sales, margin, or profitability goals, they win. One B2B company we know set too many objectives, and when they scaled it back to just a couple AND began to show how the website contributed to closed deals, the value of digital became apparent. In other words, the original measurement system was flawed but a positive change, combined with the team's refreshed focus, closed the gap. 

Big thinking also includes strategy. While there are numerous B2B out-of-the-box platforms that work well, knowing your business "use cases" before you purchase technology products will help to ensure no one overpays. In the world of car purchases, a buyer needs to determine if the car must go, go fast, be fuel-efficient or something else. Purchasing technology is no different. A right-sized system will help you go farther. And as for people, a strong IT partner should provide advice on the performance of technology buys as well as their anticipated life cycles, so expenses are planned appropriately for your needs today and tomorrow. 

On the other side of the coin, as part of implementation excellence, a strong toolkit (again a system) always makes the planning and execution more manageable. A multi-year project roadmap, and sometimes one that includes implementation gates for "go/no go" decisions, can be a valuable tool to have. Likewise, knowing the "MVP" or minimally viable product that is necessary to launch, provides a great bellwether for investment postures.  And if the project is managed effectively (again people) to reduce scope creep through strong project management functions, then expenses do not spiral out of control. 

And finally, implementers like Xngage, highly steeped in B2B operations and processes, can be an invaluable asset in your arsenal. Experts like these design for specific B2B outcomes, and their years of work experience in so many different digital environments will benefit you: they know where the pitfalls, shortcuts, and optimizations are before you even have to ask.  They are the people with tremendous systems knowledge that will make the spend go farther. 

The Top 3 Ways to Reduce Expenses in Digital Transformations

If time is of the essence, here are three areas that are worth pursuing imminently: 

1. People+Process: Select/refresh the right team to develop or update the strategy that drives your technology
2. People+Systems: Conduct an effective technology stack review (and annually, if possible) to determine what is working well, what's not, and what needs to be upgraded based on your (refreshed?) objectives and strategies
3. People+Outcomes: Build digital goals into performance plans and reward your team for digital work well done

These three areas rise to the top under the banner of people-focused purpose-driven resources. If teams drive to objectives that directly or indirectly benefit them and your organization, they will create the most value.  The right team appreciates being included in the process, systems, and reward of a job well done. 

A Case Study in Success: Fort Garry Industries

Canada's most trusted truck and trailer parts company, Fort Garry Industries, wanted to broaden its channel offerings so that their buyers could purchase online. Creating a true digital commerce website allowed them to reinforce customer relationships and ease the internal burden of order entry and processing. They chose to execute their strategy over time, evaluating their ROI as they go, and re-investing when needed. The digital transformation led by the right people followed strong process and systems upgrades, leading to desirable outcomes. Now the phrase "digital transformation" isn't overwhelming, it's actually something they look forward to developing collectively. And just as importantly, digital is not overly expensive.