When looking at companies that have gone through a successful digital transformation, there is no shortage of information about how great it has been for their profitability. In today’s business environment, there is really no doubt that going through this type of process is going to help you remain competitive and increase your profitability. What many people ignore, however, is that it can also be a very costly process up front and budgeting for technology is key.

Every digital transformation is unique, but they will all have some major costs associated with them. The bulk of the expenses associated with this type of effort are going to be on building out the technology infrastructure for the needed digital platforms. Some common examples of major expenses associated with a digital transformation include:

  • Purchasing Hardware – Most companies will need to purchase hardware for a digital transformation. This may include new PCs or Tablets for people in the business, servers, network equipment, and much more.
  • Cloud Services – Cloud services are an ideal solution for most digital platforms. While cloud solutions typically save money compared to on-premise options over the long run, they are still an up-front expense that need to be accounted for.
  • DevOps Costs – Software development is one of the most important parts of any digital transformation. The initial DevOps process can be quite costly.
  • Technical Training and Support – As you add in new digital platforms and services, you need to make sure employees are trained on them and customers can get the support they need.

Depending on the size of the company and the scope of the digital transformation, these things can add up to millions of dollars. Major corporations like Wal-Mart and General Electric have committed to spending more than $1 billion on their digital transformation process. When a budget requires these large numbers, it is important to make sure that everything is planned out properly to ensure the company can afford to complete the process successfully.

Support from the Top Down

The first thing you need to do when getting ready for a digital transformation is make sure that you have support from every level of management, starting with the CEO. While the bulk of the work and expenses will be in IT, it will impact the entire organization in very significant ways. Many companies decide to re-allocate money from other departments into IT during this process to help pay for it. Needless to say, it is critical that everyone be on board in order to avoid conflict and even opposition to the transformation.

Focus on Revenue Generating Items First

For many companies, the digital transformation process will include adding a variety of new digital products and services. If these will be generating revenue for the company, they should be made a priority. Any necessary steps in this process that will increase profit without requiring major costs should be done first to help offset the overall costs of the transformation.

Factor In Cost Savings when Budgeting

When planning a budget, it is not enough to simply look at the raw costs of each step. Look at the cost savings you will enjoy today, and over the coming years, to ensure you have an accurate budget. For example, if you are going to transition to a cloud data storage solution, it will likely cost you quite a bit of money for the service. In the upcoming years, however, you will be able to eliminate the costs associated with supporting and replacing the on-premise storage solution that you currently have.

Once all your storage needs have been transitioned to the cloud, the total annual costs will almost certainly be lower than they would be if you continued to manage it locally. These future cost savings can be used to pay for the steps in the digital transformation that will be occurring during that time.

Develop a Reasonable Timeline

A digital transformation is not something that is done overnight. For most companies, the bulk of the changes and expenses will take place over the course of several years. Even beyond the initial phases, there will be ongoing support and evolution for the digital platforms that are created. If your company does not have the budget to pay for an entire digital transformation up-front, that should not get in the way of beginning the process. Spreading out the expenses over multiple years will help you to be able to accomplish the end goals in a way that is financially responsible.

Work with Experienced Experts

A successful digital transformation involves many changes not only to the technology being used, but also to the way business is done. Hiring an experienced digital transformation expert will help you to ensure the entire process goes smoothly and will more than pay for their costs in the long run. By committing to ensure your business can succeed in this digital age, you will be making sure you are positioned well for whatever the future holds.