Many companies have leaders who begin digital transformation with nebulous notions of a digitised enterprise, but fail to link their planned projects and programmes to business value. Unfortunately, when leaders don’t show how their efforts will create value, they are giving their CFO, CEO and other senior executives little to get excited about. The “cool-factor” might impress the wider workforce, but it’s not going to cut it with the most senior element that hold the keys to the budget you so desperately want to get your hands on.
The fact that a business is more digitised, doesn’t automatically mean it has become a better business. Because investing in technology for the sake of it is a fools game that shrewd CFOs will nip in the bud.
This means that many transformation strategies and digital aspirations never see the light of day because those crafting them get too caught up in the edginess of it all and fail to construct a self-funding business case, or at least a digital use case, which is capable of acquiring the executive buy-in needed to get the initiative off the ground.
Even worse, those that manage to get their hands on funds, go on to launch into their transformations with no way of tracking and eventually demonstrating the business value their project or programme generated for the business. “But look we’re more digital now” is not going to impress the CFO and CEO who have numbers to report to the board.
When you fail to demonstrate the digital business value derived from your initiatives, your chances of securing more funding are dramatically reduced.
No Value, No Funding, No More
When transformation leaders fail to quantify economic outcomes, their stakeholders see clear costs and unclear business value. Sexy apps and unsubstantiated benefits are not going to get you far when asked to demonstrate the digital business value your initiatives have delivered. If transformation leaders fail to focus on digital business value, they risk:
- Lack of funding to get their ideas off the ground
- No way of proving how their initiative delivered business value
- Little chance of getting more funding to build momentum
Lofty claims of a more engaged workforce, more satisfied customers, and more effective operations are worth little if you do not show exactly how they generated business value, and what their outcomes are worth. This calls for the capture of the right data, and using it to demonstrate business value.
Digital Business Value
Transformation leaders need to blend their tech-savviness with business sense. They need to be able to show executives how their efforts will create value, and carefully craft a business case with digital business value indicators to secure buy-in, prove the business value realised, and build transformation momentum by securing funding for even more initiatives. When you establish clear digital business value, you will keep digital business transformation high on the CEO’s list of strategic priorities.
Digital transformation concepts often raise questions about cross-functional priorities, and where to invest in innovation. But without a quantified link to value and a solid business case, such efforts are usually unable to show early benefits, build momentum among executives, and secure themselves a spot at the strategy table. So they stall before they get going and innovative teams are left demoralised. The CIO who had aspirations of launching 100 apps over the next two years manages to get a few off the ground, but a lack of financial confidence among senior execs, will hamper his or her hopes of doing anything more ambitious than that.
Self-Funding Business Cases
The most successful digital transformations are self-funding, and their quick-wins demonstrate clear business value. With a self-funding business case, a transformation programme can maintain momentum and build serious executive buy-in across the organisation.
You need to get clear about what your digital initiatives will be worth, and exactly how they will generate value. You need to demonstrate your digital business value journey, which includes planned, tracked and realised digital business value. This value also needs to stack up well against the cost to implement and support overarching strategic priorities.
Three Digital Business Value Take Aways
1. Ensure a few early and easy quick-wins, which show digital business value to build confidence among executives
2. Tackle at least one sensitive issue to show how serious you about solving business problems
3. Orchestrate a balanced portfolio which can generate value for a broad range of executives and lines of business