View source: Alex Tapper
Current circumstances have led many companies to ramp up their digital transformation efforts. If you’re in a similar situation, you might be wondering whether your digital investments align with your overall business strategy. The good news is certain tactics can ensure you devote your dollars appropriately.
In many ways, COVID-19 accelerated the technological changes that many predicted were coming. The pandemic increased digital touchpoints with customers, ushered in the era of remote work, and prompted value chain adjustments, among other things. This meant that companies had to rapidly address these long-tail changes in a short period of time, and with fewer resources.
Take Frito-Lay, for example. Launching a direct-to-consumer shopping experience was always part of the plan, but the company found itself compressing five years of digital capability planning into just six months to meet consumer demand. The circumstances prompted Frito-Lay and its parent company, PepsiCo, to move at a speed once thought impossible.
Due to this compressed timeline, you probably have had to prioritize digital investments in order to meet various demands. The problem? The people in your business might be struggling to keep up with the technology they have to use. Case in point: 92% of executives are satisfied with their companies’ technological experiences, whereas only 68% of employees agree.
With the exception of a technology product, technology really shouldn’t lead the way in your assessment of new service lines or investments in current departments. Rather, it should be about making customers happier or your employees’ jobs easier. To that end, your digital capabilities must grow with your company, and not separately.
Digital Transformation: How to Make Updates With New Technology
It makes the most sense to approach the process of investing in technology like any other major business decision. Talk with other C-suite members on a regular basis to discuss ongoing initiatives in addition to forward-looking plans. Preparation will be key. Otherwise, you might very well fail to make the most out of your digital investments.
Although certain aspects of digital investment plans will vary from one business to the next, they should include the following steps:
- Align your technology strategy with your overall business strategy.
This might seem obvious, but it’s a critical step. Aligning the two doesn’t just help inform decisions around digital investments — it also ensures that each strategy enables the other. If you’re making business decisions that will drastically change mid- to long-term technology strategies, then this merits serious consideration as to why. It’s OK to change, but it needs to be intentional. If it’s not, you risk unnecessary and repeated changes, increasing the risk of “change saturation,” a phenomenon that’s now affecting 73% of employeeswho can no longer absorb additional organizational changes.
- Evaluate your company’s current versus future state.
When examining technology needs, evaluate where you are today versus where you need to be — and by when. Although you don’t need to know exactly how to update with new technology at this moment, you should be thinking about how to support business activities as they roll out. Build a technology road map that details the technology’s application, processes to support innovation, and pain points to be solved by the new digital capabilities prior to moving into the evaluation process.
As you determine which new technology to invest in, think through factors such as usability, capability, interoperability, security, and legal compliance. Additionally, any new digital investment should integrate seamlessly into your existing tech stack. Beyond that, as you’re evaluating new technology, consider what implementing a given technology might mean to the financial and business viability of your operations. If it puts either into question, move on.
- Account for costs.
Whether you decide to build, buy, or borrow funds, factor in the upfront investment as well as long-term maintenance of your solution. In 2021 alone, businesses worldwide spent $4.24 trillionon devices, data center systems, enterprise software, and business communication services. By the end of 2022, that number will likely jump by 5%. Where businesses are devoting these dollars depends largely on their size. Smaller businesses often invest in software and hardware, and large organizations spend money on managed services.
4. Plan, plan, and plan again.
Though you might want something done by a certain time, it doesn’t mean it can be achieved within that time frame. The importance of planning in business cannot be overstated when it comes to technology investments. If you’re looking into a new initiative, assess the other projects already on the table to balance your priorities. Then, break down those priorities into quarterly goals and request that employees provide regular updates on their progress. Such transparency can provide the momentum necessary to support both your technology and business strategy. You might also find synergies by focusing work in particular areas of your tech stack.
Your digital investments should centralize around four areas: operations, customer experience, employee experience, or innovation. Your investment might overlap in a few of these domains, but it should hit at least one. Moreover, you should focus on digital capabilities and investments that align with and widen your competitive advantages. From there, you can ensure that your digital capabilities grow with your business.