How to Rebalance IT Investments to Create New Value
There are ways to accomplish digital transformation within your existing budget parameters.
The following is an excerpt from my book Digitally Remastered, which outlines how to successfully build a software factory to support your digital transformation efforts now and into the future:
Despite clear need, most businesses can’t afford to budget for digital transformation and innovation as a completely new, independently funded endeavor. Although some additional investment above and beyond existing technology spending may be required, optimizing existing spending should be the first step in creating new capacity to fund innovation-targeted transformation. In technology organizations where the majority of resources are dedicated to “keeping the lights on,” restructuring and reprioritizing investment across the entire portfolio can create significant savings that can be redirected to fund existing and new projects with the greatest business potential.
An integrated approach that evaluates the entire technology portfolio is an effective tool for funding new investments within an existing budget, and it also ensures that the impact of investment changes is thoroughly understood. For example, a new API initiative or application development effort may require additional investment in a specific legacy system rather than resource reduction. Or you may find that rebuilding some existing functionality will yield significant savings that can in turn fund new initiatives. Investment in automation in particular can yield substantial long-term savings that can be applied to value-creating efforts.
Most importantly, you must be able to objectively evaluate each and every project based on the value that it provides in the current business context. Stakeholders may have asked for some technology capability many years ago; that effort may still be funded at its original level—or perhaps higher—even though the need may no longer exist or has decreased in priority. Technology projects have a tendency to take on a life of their own; “pet projects” can be a seemingly endless draw on resources. You may find that you have a collection of zombie projects where the original justification either no longer exists or is lost to history. These and other low-value efforts represent opportunity cost that detract from your ability to invest in innovation that really matters.