Path to Digitalization – Framework

Digitalization is inevitable. Every company is working towards adopting digital technologies, albeit at various stages of maturity. Some have existing technologies that are outdated or unable to scale, requiring upgrades (remember the classic saying: "What got you here, won’t get you there"). Others are in the early adoption stage, building their technology infrastructure from the ground up. Regardless of your organization's stage, the approach to digitalization is key to success.

In this article, we explore a basic framework that leaders can use to design their digitalization approach. Leaders face three primary paths to achieving "digital nirvana"—Buy, Build, or Partner.

Buy

This approach involves acquiring a company that already has the solution or expertise you need. Product-based companies often use this strategy to find another company with a product portfolio that complements or enhances their own. Organizations building solutions to support internal business operations may use this approach to acquire off-the-shelf (OTS) products that address specific business needs.

Build

This path involves utilizing internal resources (or a combination of internal and external resources) to develop the solution. Applications built using this approach are often referred to as "homegrown solutions." Building in-house offers organizations the flexibility to pivot if requirements change, the ability to control their own destiny, and the opportunity to create a system tailored to solve unique business challenges. Additionally, organizations can build solutions in phases, ensuring the development aligns with evolving business requirements.

Partner

In this approach, organizations partner with vendors that have the necessary skills to help develop the solution. There are two ways companies can navigate this path:

1. Resource Augmentation: Companies seek external talent from vendors to help build the solution. This model is similar to the Build approach but involves partnering with vendors to provide the required expertise and resources.
2. Dedicated Solution Development: Companies engage with firms that specialize in building custom solutions tailored exclusively for their needs. This approach requires continuous monitoring, frequent oversight, well-defined milestones, and clear requirements to ensure success.

While this article explores the broad strategies leaders or organizations can adopt on their path to digital nirvana, there are many other decision points to consider when choosing the right path. In our next article, we will delve deeper into these considerations.