How do we qualify the cost of failure and reflect this in the business case to underscore the need to invest adequately? There is well documented research on the low success rate of digitalization initiatives, poor adoption and delayed deployments, but little on the actual $’s involved.

In order to better understand the cost dynamics, imagine an iceberg. The visible tip is the smallest part of the iceberg. This is analogous to the cost of software. The largest part is below the water line, often hidden, and is analogous to the cost of the professional services to implement and execute a digital platform. It is not uncommon for the software: professional services cost profile mix to be around 1:9.

To clarify, digital platforms require end-to-end integration – they are not standalone apps. Given this cost imbalance, getting to grips with the professional services element is critical.

Professional Services costs are determined by skill set rate card multiplied by days effort. For large and complex projects, forecasting skills and effort can be challenging. Taking a leaf from the manufacturing industry, lean and six-sigma practices, I am reminded that:

“Cost is more important than quality, but quality is the best way to reduce cost”

Genichi Taguchi

How do we increase the probability of success? My article ‘Improving Your Digital Transformation Success Rate‘ outlines key factors that an organization needs to address to improve success rates. The downside is the investment required as business cases can be challenging at the best of times.

How do we get value for money? Organizations need assurance that costs will be fixed and controlled. There is a temptation to cut corners and if the true cost of the professional services element is hidden; the business case becomes software centric and likely to become another failure statistic. A better way is to qualify the costs of failure when assessing the scope and level of professional services. What if we need to rework, increase the volume of change requests, write-off work, delay the project, perform more tests, suffer from low adoption etc. ? How would that impact the business case? This cost avoidance argument can be used to balance and justify a broader understanding of a more comprehensive business case.

How do we mitigate and reduce the cost of failure? Allocate the best talent to the initiative, and perform in depth due diligence on any external professional services provider to ensure you get the best quality professional services. Low price, administrative, unskilled resources will have a negative exponential impact and increase the cost of failure (adding to the below the water line iceberg).

Organizations that fail fast, learn fast have inherent capability to adapt and course correct as they ride the wave and are typically those already operating best in class with a high level of maturity. For the remaining majority, digitalization can be complex and daunting. We learn from our mistakes, but sometimes we need it ‘right first time‘. Otherwise, failure becomes extremely expensive.

Need Help. Contact Us.