Not just an IT Project!
The Opportunity Costs
of Digital Transformation Why Waiting can get expensive here
of Digital
In fact, many companies see investing in digital technologies as a necessary evil rather than an opportunity to gain competitive advantage. As a result, the decision process for purchasing and implementing new technologies is often delayed - and this costs you more in the long run!
What Investments are you focusing on?
In many organizations, budgets, energy and focus are concentrated on immediate, more tangible investments, such as new product lines, hiring more people and other strategies that have a positive impact on (short-term) revenue. With this approach, and without adequate investment in your IT, the existing technology will eventually become so stretched that operations and the bottom line will suffer.
Don’t wait until this Point
Often, the IT investments necessary for the implementation of digitalization are only reviewed when the first difficulties due to stress become apparent. If you wait until this point to consider changes, you are ignoring something important: the opportunity costs.
Digital Transformation: Implementation costs more Time and Money in the Short Term
Once the decision has been made and a technology initiative has been developed, it always takes a certain amount of time until the strategic approach has been defined. On the other hand, this also provides time for internal preparations.
Meanwhile, the competitors, that have already brought themselves up to the state of the art, benefit from a lead in production planning, delivery times, transparency and customer satisfaction. And this is ultimately also reflected in the sales and profit figures.
Opportunity Costs express a Foregone Benefit
Your Opportunity Costs if you delay the Digital Transformation
In the short term, it may seem cheaper and less time-consuming to do nothing and continue working with your existing technology (which is still working). But in the long term this approach will most likely cost you more.
These hidden costs arise from a strategy of doing nothing:
- Higher IT maintenance and support costs - it is costly to maintain old systems.
- Dependence on limited knowledge - fewer and fewer employees are still familiar with the outdated system. And the employees who are very familiar with the system will retire at some point.
- Operational inefficiencies, as manual or outdated systems don’t offer the flexibility, automation and efficiency that modern digital tools can provide.
- Missed opportunities to provide a better service to your customers because you can’t respond quickly enough.
- Sub-optimal revenue growth, as outdated technology can limit your company’s ability to implement new ideas and develop innovative products or services.
- Dissatisfaction and frustration among employees, who have to work with outdated user interfaces every day and wish for modernization.
- Difficulties in training new employees, who are not familiar with your old systems.
The Budget for your ERP Implementation This is how you
plan realistically
plan
The Importance of Change Management
Some companies even remove organizational change management from their digitalization project. This is because those responsible are convinced that they can and should save money in this area in particular. In the long run, however, it will cost them more: the loss of benefits and the interruption of operations caused by bad or suboptimal changes are usually much more expensive than the costs saved upfront.
Technology is not a Necessary Evil - but a Long-term Investment
Business today is fast-moving and management decisions and actions must keep pace. Technology is seen as a necessary evil in many cases.
But you need digitalization if you want to run your business successfully. That’s why turning a blind eye to the digital transformation is not an option. 🙈 Because, unlike you, companies that recognize this and act accordingly will always be one step ahead.
