How to build a convincing case for digital investment
Many organisations rely on business cases to help prioritise projects identified as candidates for investment. The quality of your business case can decide your position in the investment queue amongst competing projects.
Business cases can often take weeks or even months to research and create. Any delays to approval could provide your competitors with an advantage. While many organisations appreciate the opportunities and risks that digital presents, one of the major stumbling blocks is the often long-winded and arduous process of getting investment approval at a level that will really shape the future business.
Getting the required levels of investment into digital innovation that drives fundamental changes to the way the business operates can be difficult. For many risk-averse organisations, the uncertain nature of the financial returns from digital investment can create a significant stumbling block.
Executive teams and programme steering committees are generally responsible for giving some projects the green light, while putting others on hold, or sending them back to the drawing board. So how do you move your digital project or transformation programme to the top of the pile, and help your business stakeholders understand the value of your proposal?
In this blog, we explain how you can build a convincing case for digital investment by collecting the information and resources you need to get digital onto your organisation’s agenda.
Find out more about how we can help you develop a compelling digital strategy.
Align your business case with your wider business objectives
Investment in digital innovation can be seen as a “pet project”, a “nice to have” or not fundamentally aligned to the organisations strategic objectives.
If your organisation has a strategic framework and/or agreed strategic objectives, communicate how your digital business case will contribute towards achieving the strategic imperatives.
Be clear with your project scope and who will be responsible
One of the first challenges is to help the business understand the scope of what you are trying to achieve.
Digital activity has traditionally been the domain of the marketing function, technology function or a combination of both. Today, innovation labs and transformation teams are often established, disestablished and moved around the organisation with such frequency that no real progress is made.
Digital innovation pervades every area of the business from strategy through to finance, operations, marketing, product design, HR and internal communications. To create a business case for digital transformation, it’s important to define where the boundaries of your proposal start and stop, which areas potentially overlap with current ongoing activity streams, and which areas are new areas of investment.
For example, are you trying to Digitise existing business processes (e.g. replacing paper-based process with online forms), or is your goal Business Digitalisation (e.g. reinventing products, services and processes by combining current business assets with innovative digital technologies)?
Also, be specific about what your business case does not include (e.g. All existing digital marketing activity, current ICT projects including CRM replatforming).
Include the risks and hidden costs of doing nothing
Is your organisation facing digital disruption? Traditional ways of evaluating business case ROI may not truly capture the real value to the organisation of digital investment at this critical time. Payback periods may be extended across multiple financial years, and there is a high degree of uncertainty over what the future competitive landscape will actually look like.
Make sure that the cost of “doing nothing” is clearly articulated. Most organisations comfortably consider the costs of any new initiative, but struggle to model the real risks and costs of “doing nothing”.
Will you suffer declining customer engagement or satisfaction over the coming months and years?
If staying on the current course will cost money, customers and engagement in the long term, the rest of the business needs to understand how your digital business case can help.
Today, investment in digital is not a “nice to have”, it’s essential for survival.
For example if your customer numbers have been in rapid decline over a number of years, you can model the likely three-year impact of doing nothing versus investing in how investment into a digital customer experience can help reduce the rate of decline (even if there is still a net decline overall).
Attach dollar values to both hard and soft benefits for maximum impact
Supporting your cause with calculations which provide indications of cost and return on investment is critical. The fact that you’re putting a case together implies that there will be focus on ROI.
When articulating the ROI of digital investment be sure to include:
- Improvements to customer satisfaction
- Reduction in operating costs
- Impact on brand value
- Market opportunities created
- Value in terms of defending against disruption
- LTV of new customer acquisitions
- Employee satisfaction and associated cost reductions in recruitment and training etc
If you cannot easily add values and metrics to these, find third party sources which can back you up.
Don't be afraid to re-use models developed by others and then refine or expand on their approach.
Make sure your project isn’t doubling up on features that are found in another project competing for investment, and, if it is, then join forces with the competing team if possible to strengthen your case based on collaboration.
Educate your stakeholders
The internet has digitally transformed how we access and leverage information.
There is a wide range of content available to help build your business case online including business case examples, ROI frameworks, industry presentations, content from events, discussion groups on LinkedIn, consultancy white papers and press articles.
By collecting and curating the most relevant material for your business stakeholders, you can help provide them with the confidence to green light your business case.
You’ll also want to present clear definitions of what digital is as it applies to your project. Some simple frameworks and explanations of where you see your business plan aligning with where other businesses are investing can also help.
Invite your key stakeholders to relevant industry events. Today, many business events have content related to digital technology. There are events with a specific focus on Digital Transformation that are a helpful way to bring your Exec team up to speed quickly.
Phase your investment to generate results fast, then expand from there
Allocating a small amount of your overall budget to design and deliver an upfront proof of concept (POC) is helpful for two reasons.
Firstly, you're able to reduce some of the tension which comes with large expenditures within organisations that have many priorities competing for dollars.
Secondly, you're able to de-risk the project in terms of testing your approach, failing fast if needed, pivoting direction, and having a useful tool to demonstrate what the finished product looks like.
The most important consideration with this approach is to make sure that you agree what the next steps are following a successful POC. These can include a high-level project plan, clear milestones and further programs of work. This will mean you and your colleges are prepared for the next step.
Provide governance and be prepared for stakeholder challenges
Providing the right project governance and support structure can make the difference between businesses that manage to innovate at pace and create a digital future, and those that allow their current processes to prevent genuine digital transformation.
Equip yourself with a powerful business case backed by the right research, and you’ll be able to answer any questions from the boss, or colleagues, with confidence and clarity.
At Solnet we’re here to help you develop a compelling case for digital business investment. We work closely with you and your team to accelerate digital capability and help your organisation realise its digital potential.
Talk to us to see how we can help you build a business case for digital investment.