IT Leadership has many responsibilities in the organization as a whole. However, securing funds to fuel the IT organization’s success is a big one. CIOs, CTOS, and technical leaders play a principal role in the enterprise in regards to IT capital investment levels. Asking for large sums of money comes with roadblocks. We accept this as normal, no matter how transformative the tech is. Read on to learn how to acquire the capital for funding a digital transformation strategy.
Convincing sponsors about the benefits of using a new technology is often not the heart of the problem. Getting them to release the necessary capital is the main issue. It about making a strategic concept into reality. Those holding the purse strings may seem like a gang of skeptics. You may view them as narrowminded dinosaurs. However, it is their business to minimize financial risk. Remove all emotion from your approach. Let the numbers do the convincing.
C-Level decision-makers are all about the bottom line. This is what they care about most. These characters are occupied with running the business. They have limited time and zero-tolerance for considering details. How the digital transformation (DX) will get executed in not their responsibility. Their concern about a project is concentrated on the ROI. Any recommended initiatives need to be translated into numbers. Define forecasted income and return percentages. Having these numbers ready provides a better opportunity to secure the funds you seek.
DX is dynamic and leverages fluid technology. Predicting trends four years out is near impossible. True, for even the most knowledgeable expert. However, the board of directors is not going to be happy with shifting initiatives every few quarters. So remember to add metrics to your plan that measures the progress of your project. The idea is to account for fluctuations reflecting risk and demonstrating fiscal flexibility. Anticipating risk and having a plan to mitigate it must be part of the program.
Show the Data
CIOs and CTOs are obligated to demonstrate financial discipline. Not only to colleagues and the board but especially to shareholders. The meaning of these responsibilities is as tremendous as they are apparent. IT managers encounter a multitude of financial hurdles every day, directing and reviewing capital expenditures (CAPEX) are a significant part of their role.
Keep in the forefront of your mind that enterprise leadership defines success with the income sheet. The positive fiscal publicity a company receives plays a critical role in attracting new investors. The Investor Relations team will not tolerate any expenditure that generates an unfavorable report. So, whether your project is going to demonstrate revenue generation or cost savings, the numbers should shout opportunity.
Follow through with quantitative data to support any presentation for capital requests. Maintain a keen awareness of the General Accounting practices and compliance issues that potentially raise governance issues. Most importantly, describe your capital in terms of time adjusted measures of profitability, such as NPV and IRR.
Financial formulas backed by reliable data wield a powerful influence on getting capital approved. Demonstrate the project selection criteria built with a defensible business case and a solid Return on Investment. Create a business case and ROI by using company accepted standards. Use and ROI calculator along with Net Present Value (NPV) and Internal Rate of Return (IRR) outcomes.
Start with an examination of the current market. Discover what competitors are accomplishing and estimate the spend levels required. Give examples of how digital transformation is changing the growth of your industry. Connect the trend and explain how it is disrupting the competitive landscape.
Find relevant sources showing similar IT spend levels. Competitor capital investments are factors that must be considered. If multiple indicators can demonstrate a compelling trend, it can be one of the best tactics available. Use it to convince leadership for big tech spend. At the same time, show them what positive results are expected in return.
Enterprises globally are making significant purchases in technology. They are searching for and buying the products and services that empower digital transformation (DX). Business models, customer service, delivery operations, and organization culture are transforming rapidly. Recently, the International Data Corporation (IDC) forecasts global DX spending to reach $1.18 trillion in 2019, an increase of almost 18% higher than in 2018.
Tell a story
Make numbers and financial data the heart of your presentation. That data will be your fuel. But dress that up with a convincing antidote or story.
Often, some decision-maker remains on the fence after seeing financial data. An emotional element to bolster your spreadsheets can make the difference between getting $10 million or not. The math will always have some ambiguity left to interpretation.
The talented IT leader has a story ready. Tell them the impact your program will have on publicity related factors. Describe the new customer experience. Review the HR recruitment and employee turnover connected to cost-saving aspects. Paint the image of how investors, customers, or employees will benefit. Make it impactful and directly related to your project.
It is never about the cost. The decision will be based on the value the project generates. Keep pointing to the advantages. Connect the competitive gains to the bottom line. Remember this decision is hinging on getting total agreement from all stakeholders.
- Present the numbers confidently
- Tell the story connected to the financials
Bundling these critical elements into every delivery is your way to funding a digital transformation strategy.