Digitalization in time of budget constraints

When every penny counts, resource optimization becomes the top priority for businesses of all sizes.

Yet, every limitation can be an opportunity. An opportunity to reinvent your business models, change outdated processes, and modernize your products. All of this is almost impossible without investing in digital transformation or updating existing systems.

So, how can we deliver more when we all have fewer resources?

To answer this question, our partners at Radenia AG organized a webinar for business leaders interested in digital transformation. Here’s a brief recap of the best insights shared by Alexander Radchenko (CEO at Radenia AG), Alberto Parolo (Principal Consultant at Radenia AG), and Oleg Nesterov (CEO at MindK):

The new “normal”: key challenges for business

Companies all over the globe are facing enormous pressure to change how they operate. Above that, client expectations change so fast that the ‘business as usual’ attitude is no longer viable.

Nowadays, it is hard to imagine any large process or service model that doesn’t rely on IT systems.

Yet, we face shrinking budgets for IT transformation and infrastructure.
Companies reduce in-house IT departments and ditch expensive digital transformation consultants. Stakeholders expect their teams to deliver fast and solve short to mid-term needs at a reasonable cost. Businesses are no longer willing to invest in the long horizons. Therefore, many strategic projects are put on hold, especially in bigger companies.

Thousands of IT experts have lost their jobs in Silicon Valley. At the same time, many companies can’t take advantage of available resources because of the high costs associated with local expertise.

Many are looking for cheaper alternatives, including offshore and nearshore providers. After all, if all your operations are done remotely it doesn’t really matter where your employees are located.

The discovery of remote work was a shock for many SMBs while enterprises were already investing in smart working processes. The next logical step should be making processes run efficiently by people not physically present in the same place.

‘’If people from my team are working remotely, they can easily integrate with teams that are working nearshore. I think we’ve broken some barrier and accelerated transformation in this area.’’ – Alberto Parolo, Principal Consultant at Radenia AG, Italy.

Startup challenges

Investors lost their appetite for risky investments making it hard to raise funds. What’s more, startups were ineligible for government support in many countries, making them go into a ‘“deliver or die” mode.

The lack of funding was made worse by massive shifts in demand across most markets. Many niches become dominated by big players making it even more important to adapt and deliver quickly.

Startups that operate in the B2B and enterprise markets also face many problems experienced by potential clients.

The good news is that if a startup addresses an urgent market need, investors are more than happy to show support.

small and medium business challenges

Although products and services from small and medium businesses are in great demand, many of them find it hard to manage their delivery capacity. They simply lack the tools and resources to do it properly and fast.

Many non-IT SMEs have no expertise needed to upgrade their digital capabilities.

“Recently, I was talking to the owner of an online retail delivery service. I was surprised to learn that despite a significant rise in demand they were out of business because they were unable to scale their operations and their clients were acquired by bigger players.” – Alexander Radchenko, CEO at Radenia AG, Switzerland.

SMEs also suffer from a large bottleneck in changing processes and systems. This is largely because they depend on the capacity of founders and a handful of key stakeholders making SMEs more vulnerable to the crisis compared to larger companies that have an excess of managing capacities.

Therefore, SMEs need to focus on a few key projects that are vital to sustaining their revenue.

At the same time, they are much more sensitive in terms of cash flow and have fewer options in addressing transformation.

Business continuity techniques weren’t traditionally a focus for SMEs. So now they have to adapt methods from bigger companies while staying agile to react to the changing market needs.

Enterprise challenges

Most of the problems facing enterprises today were apparent even a few years ago. The crisis only made them more urgent. Now they have to address these structural problems fast and with limited resources.

The good news is that these challenges can become opportunities for companies, both large and small.

Lack of coordination is a problem for all businesses, especially for enterprises, where it’s common to have dozens of programs running at the same time.

The bigger your organization, the harder it gets to steer it rapidly. That’s why traditional, non-IT companies need to break organizational barriers and facilitate cooperation between different teams.

It’s easy to get involved when you’re a part of a small team. But when a company has thousands of employees, people don’t feel they ‘own’ the company.

The lack of motivation makes it harder to react to the current challenges.
Implementing long-term initiatives becomes extremely challenging in a rapidly changing environment. Ongoing projects have long cycles, so there’s a great risk in burning cash on projects that you can’t stop due to invested resources.

So how to address the challenges of tomorrow?

Here’s a list of three simple initiatives you need to consider in order to successfully navigate these turbulent times:

  1. Focus on short-to-midterm deliverables with tangible results.
  2. Adopt a more flexible process and move in short iterations. This will allow you to avoid excessive upfront investment and have more flexibility in changing direction.
  3. Consider developing a sourcing strategy, even if you were historically hesitant to outsource some in-house functions.

A smart sourcing strategy can help you do more with fewer resources.
It allows you to leverage the expertise of specialists that can be too expensive or hard to find in your area. By delegating some of your activities you can achieve a higher level of quality and efficiency while focusing on your core business.

The first step towards a smart digital transformation strategy is an awareness of who is responsible for the processes in your company. Which of those processes you’d like to outsource and which to do in-house? Define the exact bundles of services that can be delegated. After this, you should consider which service model is right for your business and find a partner you can trust.

Read more: How to choose the right partner for digitalization of business?

Agile: the way to navigate high uncertainty

Agile is a way of dealing and, ultimately, succeeding in an uncertain environment.

It is an umbrella term for a variety of project management methodologies, techniques, and frameworks including Scrum, Kanban, Lean, and Extreme programming (XP).

Agile vaues

Agile is a standard approach for many IT companies and is gaining popularity across other industries, from marketing to law.

A traditional approach to development, called Waterfall, is built on the principle that a project phase cannot start until the previous one is 100% complete. For example, the design phase isn’t over until all the documents, specifications, and wireframes are finished, reviewed, and approved by all stakeholders.

This adds bureaucracy and makes your project inflexible.

Agile, on the other hand, works with short iterations that last 2-4 weeks.
Within each iteration, you analyze, define, design, test, and launch a new version of your product.

Imagine that 50% of your project is complete under the Waterfall model. As your product hasn’t passed through all phases, you can’t be sure it is stable enough to be released to the market.

With the Agile approach, you can launch new functionality after each iteration, gather customer feedback, learn from it, and make improvements to your next iterations.

Agile vs Waterfall

Read more: Agile vs Waterfall: which approach is right for your project?

Companies that adopt Agile across the entire organization report an increase in their revenue and profits. Among its chief benefits are:

  • Faster time to market.
  • Early risk identification (short iterations + constant feedback from users).
  • Focus on business value and a user-first approach.
  • Stakeholder involvement.
  • Faster response to change.

How Agile benefits the company's bottom line

The adoption of Agile requires companies to change not only the way they work with IT teams and digital transformation consultants but also how they operate in general, how decisions are made, who is responsible for the product, and so on.

Proof of Concept (PoC): a way to prove your idea’s potential

A typical issue with high-pressure projects is investing without a clear understanding of your needs.

To protect investments in the fast-changing markets, you can start your project with a short discovery phase. Within several weeks of working closely with IT specialists, you’ll get a much better understanding of the solution you need to build.

Even if you have a clear understanding of your needs, it makes sense to move in smaller steps.

So, start with a Proof of Concept (PoC) or a Minimum Viable Product (MVP) before implementing a massive project or rolling out a new system.

The goal of PoC development is to validate that your idea has real-world potential.

Such projects are typically short and relatively cheap. Most software development companies can deliver a PoC under a fixed-price contract.

For you, as a customer, this means fewer risks in testing out your concept before engaging with a vendor’s digital transformation services on a long-term basis.

Proof of Concept case study

Explore the full case study

One of our clients is a young startup from California. They are musicians, film, and video producers that want to revolutionize the musical beats industry.

Their main problem was that they couldn’t prove to potential clients and investors that their solution can be implemented in a user-friendly way.
Together with our client, we created a Tinder-like application for creating and selling music.

Although a PoC typically prioritizes functionality over design, our app had its main focus on the UX as our target users were all creative people. With a working app in their hands, our client provided proof to multiple investors that their idea was worth their money.

As a result, we have already started working on a fully functioning product.

Minimum Viable Product (MVP): a way to reduce risks in turbulent times

MVP is a basic version of your product with just enough features to satisfy early customers and provide feedback for future development.

Usually, it only includes the most well-understood features.

This is good both for the provider and for you as a customer. It allows IT vendors to give you a more precise estimation and reduce risks by making sure the result is more or less predictable.

But perhaps the main benefit behind the MVP approach is that it reduces your upfront investments.

Note: not all projects can be done under the MVP approach. If you need to cover the entire value chain, an isolated module will be of no use until you have a full solution in place.

MVP case ыегвн

Explore the full case study

Another client of ours is a VC-funded startup from Silicon Valley.

They’re building a platform for managing a remote workforce. The project is quite large and includes multiple modules for recruitment, employee onboarding, comprehensive invoicing and online payments, document library management, facility management, inventory database, in-built chat with flexible notifications, and much more.

Despite the apparent complexity, we were able to build a production-ready MVP within just 3 months. The project started at the onset of the pandemic, so the whole team had to work remotely.

In MVP development, it’s important to work closely with target users, focus groups, and internal stakeholders. It’s also crucial to pay enough attention to the app’s UX as even corporate users experience your app through its interface and user journey.

Our success both with the Proof of Concept and MVP models was mainly due to close collaboration with clients. I’d even go as far as say that Agile is pretty much impossible without involving stakeholders from the client side.

Conclusions

When budgets are tight, most businesses will benefit from embracing Agile as their mode of operation, moving in shorter iterations, and focusing on short-to-midterm deliverables with tangible results.

So, here’s how to approach digital transformation in times of budget constraints:

  • Prioritize value-based projects.
  • Go for transactional engagements.
  • Scale faster.
  • Save, save, save; every little helps.
  • Aim well before you shoot (develop a PoC/MVP).
  • Be more Agile.

Many companies may also consider developing a sourcing strategy, even if they were historically hesitant to outsource in-house capabilities.

A smart digital strategy can provide you with valuable specialists at affordable rates

So, if you want to learn more about Agile and smart sourcing or need digital transformation consulting to help you adapt to the new reality, you can always rely on MindK.Download the non-tech guide to full-cycle Agile development

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