As I’ve been working with companies that are in the process of digital transformation, nearly all mention a common challenge: “How can we create a budget for digital transformation initiatives for a multi-year digital journey?” I’ve blogged before about funding for digital initiatives veering off track due to the complex, cross-functional nature of a multi-year journey. But the budget approval problem starts at the outset. In fact, most traditional budgeting structures break down in the face of the challenges of digital transformation.
Obviously, digital transformation doesn’t come without investment or without costs, and it takes time to deliver on the promise. But funding for digital transformation journeys is particularly nettlesome. Often the promise of a digital transformation is some combination of better business impact as well as lower operating costs. Consequently, executives quickly gravitate to the lower operating costs. That leads them to design short sprints or projects to deliver savings. This strategy often is not realistic for funding the digital journey.