Soften the Cost of Digital Transformation: 13 Strategies for Lagging Businesses

As legacy systems and processes continue to rely heavily on manual methods, migrating to digital will require more expensive and disruptive changes to infrastructure and operations. Despite understandable concerns about the cost of digital transformation, businesses can avoid heftier overhaul costs and opportunity costs by starting their digital journey earlier. We outline several strategies that can help you mitigate costs while securing quick wins.?

How Much Does Digital Transformation Really Cost?

Those that believe digital transformation should be a priority may not be ready to allocate the capital necessary to begin the hard work it requires.?

The average cost of digital transformation can range from tens of thousands to tens of millions of dollars based on a number of factors, including:?

• Company size and resources
• Industry standards
• Data volume and integrity
• Project scope
• Compliance or regulatory needs
• Starting position (i.e., reshaping legacy systems or starting from a clean slate)
• Talent capabilities

The cost of digital transformation continues to be a barrier to businesses, despite the knowledge that it can provide great value. However, as “born digital” competitors and other businesses forge ahead with emerging technology, business leaders stand to lose revenue and market share from lagging innovation, slower strategic planning cycles and even an inferior product.??

Opportunity Costs: Why Waiting Costs You More

When creating a cost-benefit analysis for a digital transformation project, ensure that you also include the cost associated with not doing the project. Those costs not only include lost opportunities, but they often also come with serious risks.

Consider the cost of continually putting out the fires of a legacy system or dealing with issues associated with the data from an acquired business. Each has a significant impact on both the function and budget of operations. Providing a valuation of those costs can help enlighten resistant executives who would prefer that profits be spent elsewhere.?

Additional costs to consider if digital transformation is deferred include:

• Missed opportunities and revenues that competitors pursue
• Lost talent who are eager to work with modern digital systems
• Lost customers due to failure to meet expectations
• Deferred updates that create technical debt and cause increased transition costs

Opportunity costs can be difficult to measure, but they will ultimately hit your bottom line in the long term.?

How can you reduce the cost of digital transformation? Keep reading to learn how project management, product selection and talent resources can all help you lower costs and realize early wins.

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