The Hidden Costs of Digital Transformation Projects

Posted: 25/02/2021

by Jeff Scotland

Digital transformation is an absolute necessity in this COVID-affected environment. Many organisations have shed staff, but in many cases, the workload has not necessarily eased. The last thing organisations need is cumbersome, manual, and slow administrative functions. To avoid this, many institution areas will need to look to re-design processes, reduce, if not, eliminate paper, remove duplication and wherever possible, automate.

Digital transformation projects involving software acquisition and implementation are often large, complex, time-consuming and costly. But there are hidden costs that will have a major impact on a digital transformation project cost if managed correctly. In many cases, these activities are not considered part of the project, so the project’s actual cost can be much higher than the project budget has forecast.

These costs often occur before a software solution is chosen and before the ‘real’ project begins, but should they be done well, the contribution of this effort will significantly reduce the cost of the project itself and contribute strongly, if not, critically, to the overall success of the project.

Any guesses? Did you guess that the elicitation and elaboration of functional (and non-functional) requirements? If so, nice work!

In many projects, the collection and documentation of requirements are haphazard, unfunded and unstructured. However, if done correctly, they will have many positive influences on the project, such as:

  • Requirements are clear and unambiguous
  • All stakeholders have been engaged and have contributed
  • Vendors can more easily respond
  • Responses can be more readily assessed
  • Outcomes will more likely meet expectations

So, how can these costs be reduced? For one thing, this critical part of the project must be funded, and its management should not be performed part-time as part of business as usual. It is actually quite a difficult exercise and requires skill and experience.

In my experience, it is preferable to use external consultants who have done this many times, as they can bring a structured and professional approach to the elicitation and elaboration of requirements. They can also intercede where requirement conflicts arise and leverage sector knowledge to advise where needed. What’s more, they can have an open engagement with the market providers to enable the ability to leverage functionality that your organisation may not even be aware of.

So, where does all this lead? Having requirements clearly articulated to the market will often make vendor or product selection easier. Most importantly, it will minimise project variations where essential functions and requirements have been overlooked or the project scope poorly defined.

Feel free to contact us before you embark on your next digital transformation project.