Budgeting in digital transformation

17.03.2020 Angelika Siczek
hand touches dark hologram screen

Polish companies are following the trends of the European Union in the matter of digital transformation. However, to get the level of other economies, they still have a lot to do. Transformation support systems bring huge profits. However, considering the use of ICT, we are still lagging behind European leaders. The fear of the costly nature of this project is justified, but expenses can be minimized by using specific practices.

Market Requirements

For many companies, digital transformation is a compulsion. It means being or not being on the market full of rivals who will not delay in expanding their services. However, it should be remembered that this process will take up part of the budget, whether we want it or not. Hoping it will be different this unrealistic approach. Without the right means, transformation can end in failure, and the company’s image will certainly suffer.

Appropriate consideration of the situation and careful planning is actually a universal advice for any changes made in the enterprise system. Just like the transformation itself, budgeting needs an equally competent approach. Fortunately, there are tried and tested ways to make collecting and managing your budget easier.

Proper management

Digital transformation is not a cheap process. For example, US corporations spend hundreds of millions of dollars introducing applications to streamline shopping at the federal level. Home Depot, the equivalent of Polish construction stores, planned to spend $ 300 million for building a smartphone ordering service and picking them up in a store. As a result, they spent $ 1.5 billion due to additional innovations that went hand in hand with the application. This number is not surprising, because Wal-Mart, the American monopolist in the cheap supermarket market, has spent a similar amount on full digital transformation.

Of course, these are numbers that do not resemble even in the wildest ideas of the budget of Polish enterprises. However, the planning approach remains the same. Accepting the truth that proper management of such an operation is the key is the first step towards success. Leadership initiative and dedication can be a reason for successful transformation. However, even the best specialists without the right budget will not guarantee success. Without it, the digital transformation will turn into empty marketing.

Determining the context for digital transformation in the form of a plan

Each innovation should have its own conditions and aim in a specific direction. You have to ask yourself what drives a particular company towards digital transformation. Is it a growing shadow of competition whose technologies have overtaken us by level of sophistication? Or maybe there was an opportunity to get a market pedestal and change the fate of the company for years in the future thanks to technological innovations only? Similarly, budget should be planned. It should focus on specific, individual goals that the company must achieve to lead ahead of its competitors, or which will ensure that its position is maintained in other sectors.

Each point of the plan must be a response to a need or an opportunity to use. Automation will require a series of processes. Each point should have its own separate valuation and limit amount. By dividing the full budget into fragments, details will be revealed that will help plan the entire operation better from a financial perspective.

Budget planning with a flexible supply

The digital transformation operation has many variables and just as many blind corners. You won’t find out about their existence until you reach it. When planning your budget, you need to consider not only the paving factor, but also unpredictable obstacles. Most companies, with Home Depot as an example, will be expanding the initiative to implement more digital systems during the transformation. Therefore, the budget should be planned with some reserve and in a flexible way.

Digital transformation will be delayed in time. The budget must be constantly adapted, in short periods, to ensure that operations are carried out efficiently. During the next initiatives, however, one cannot forget what the primary goal was. At some stage, some departments will receive new budget plans, in line with the effects of their work and the overall course of the company.

Taking into account the effects so far

Along with the subsequent stages of transformation, the effects of existing activities will become clear. Instead of focusing only on the expenses that are coming, you should also consider the savings you have achieved in your budget planning. Optimizing your budget on a regular basis not only gives you a sense of security due to keeping your finger on the pulse, but also the opportunity to expand the number of technological initiatives during transformation. If the whole operation was planned in stages, according to the above guidelines, then the possibility of flexible adaptation during the course is even greater.

Digital transformation and technological initiatives that go hand-in-hand should not be treated as an unpleasant obligation, but more as a lot of opportunities to improve their services and internal company operations. The right budget will not only allow you to go through the whole operation defensive hand, but also will find additional opportunities to earn through unforeseen circumstances.

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