10 ways to find funds for digital transformation
According to the 2017 CEO survey by Gartner Inc., 42 percent of CEOs are now taking a digital-first view to business change.
Without question, digital business transformation requires significant investment; in a recent press release, the research and advisory firm identified 10 ways to foot the bill for the shift:
- Self-fund — works only for short-term projects (e.g., digital marketing campaigns or price-elevating digital product features) that provide immediate revenue returns with clear attribution.
- Fund within existing budgets — can work for relatively superficial digital business change over two to three years, if budgets are already generous and need trimming; not good for rapid transformation as it can throttle existing business.
- Invest from reserves — can accelerate digital transformation with low financial impact on current operations.
- Reapportion budgets — useful if digital business is recognizable and deliverable within the same corporate structure to the same customer base.
- Accept a cut in profits — may be easier if a competitor makes the need obvious, or if the company is privately or family-held with fewer parties to persuade.
- Seek investment capital — smaller companies with faster growth rates can issue more shares; larger mature companies can issue corporate bonds.
- Borrow — general available only for conventionally describable, measured-risk situations.
- Use off-balance-sheet entries — farms out digital ecosystems and startups with VCs, incubators and industry consortia.
- Divest assets — offloads legacy business units to buyers that are happy to run them in their declining years.
- Dispose of assets — can work where "dematerialization" is in play.
Gartner surveyed 388 CEOs and senior business leaders worldwide in Q4 2016 to examine business issues and areas affecting the IT technology agenda. Most responding organizations had annual revenue of $1 billion.