Digitalisation “how to” (6/5): Final checklist
As our 5-parts Digitalisation “How to” series is over, the important points need extra-emphasis. Here’s a summary/checklist for your digitalisation projects:
1. How do you start a digitalisation project?
First things first: why would you digitalise? For some companies, it’s about finding solutions to an incoming crisis; for others, it’s about their passion for technology; and then, there are the regular context/opportunistic projects that only use/deploy technology to fulfill a market need.
Crisis-based digitalisation / ”optimisation through digitalisation”
The biggest and strongest companies are, in theory, the ones that can benefit the most from crisis-driven digitalization. They have the urgency to optimise, and the resources to execute.
But democratisation of technology (and commerce) means that even the smallest firms can now fight with equal chances.
The main issue is not the availability of solutions, but rather using them to increase value all along the value chain.
A digitalisation project often starts because someone feels strongly about it. Although one doesn’t have to be Shopify’s Tobi Lütke and start a revolutionary e-commerce platform, passion and drive are important factors of bootstrapped digitalisation.
Our learning: stay passionate while building your solution and while looking for the most perfect product-market fit.
There are situations, though, where neither a crisis nor an entrepreneur’s passion plays a role in digitalisation.
Especially in larger companies, where the hard focus is on growing the business, there’s an acute need to deploy digital technologies for the targeted goals of staying competitive and increasing revenue and profits.
2. How do you create, evaluate and manage digital value (2/5)
A company’s readiness and attitude towards innovation are essential; but eventually, it all comes down to delivering value for stakeholders.
Where does digitalisation create value?
All elements of a business model can benefit from digitalisation, as value can be created in many ways (such as, but not restricted to):
- have a superior service or product,
- that’s made with better employees/partners,
- at lower cost / higher margins than the competition,
- delivered quicker / at a better price / through more sales channels,
- and/or monetised through the most appropriate payment methods.
Just make sure you are 100% objective when assessing and developing the digitalisation project, as opposed to pure wishful thinking.
How can you assess the value of digitalisation?
Just by digitalising a piece of your business does not automatically guarantee any benefits (for you and stakeholders). You will need:
- Processes: try adopting at least a simplified design thinking framework, where you build, measure and learn on a continuous basis.
- Metrics: build a set of clear, objective KPIs that closely reflect value creation for your specific case.
- Cost-related metrics, e.g.: total investment, burn rate, and/or CAC/Customer Acquisition Costs
- Growth targets, e.g.: MRR / ARR, community growth rate
- Bottom line: profit, LTV / Lifetime Value
What is your digitalisation flight plan?
Once targets, metrics and initial plan are clear(er), you will want to:
- Learn as much, as quickly as you can about your digital product’s users and business case.
- Not risk huge amounts of money and effort on something that’s still insecure.
For both, the solution is an MVP / a minimum viable product / ”prototype” that can act as a placeholder, in order to maximise learning, while minimising costs and effort.
Where do you go from an MVP? Sure, you can be successful with a great digital product/solution. If not, try to pivot – i.e., change the strategy without changing the overall direction. It might sound unstable, but it can deliver “value”:
What if a pivot doesn’t help, either? Then maaaybe just accept that your digitalisation project cannot create value within the current context (technology / market / revenue-streams), stop it, and find other ways to create digital value.
3. How do you do software product development/management?
The development of a digital solution/product usually starts once its value is clarified/confirmed. Software development can get quite capital-intensive, therefore:
3.1. Establish the functions/features setup, to result in a level-zero plan / roadmap
clarify the functions/features
choose the appropriate technologies
define the architecture
3.2. Pick your technology
Once the functions and features are clearer, the technology selection is usually up to the software development team, unless you have specific constraints. For example, you might already have an Azure account/subscription, in which case it makes more sense to stay within the ecosystem than move over to AWS; or your maintenance team already uses .NET, which makes Java a non-choice, etc.
3.3. Architecture definition
At Berg Software, we first define the “high level” architecture of the big elements (e.g., frontend, backend, possibly some separate services such as authentication, reporting etc.). Then, we split these into modules with their detailed, local architectures.
By setting up a modular architecture, we make sure that it’s adaptable to future iterations. Just like technology, architecture is not something you change every few weeks – but there will be situations when change is needed.
3.4. Tasks, To Dos, Planning
Now that functions and features, technology and architecture are clear, you can start developing based on a release plan and an iteration plan. Both of these plans should benefit from active, regular planning.
First, there is a chance that your internal team will partner with an external service provider, in a software outsourcing setup that provides flexible access to skills:
- You will have a product owner and/or a team to provide the internal know how and keep in permanent contact with the development team/company. Your team should know the inside-outs of the software product/solution being developed, although not architecting/developing it themselves.
- The actual development team should start with a minimal number of key people with significant experience with the technologies used by your software product/solution. Scaling the development team can be treated in the same iterative manner, i.e. increase/allocate resources once the picture is clearer (technologies, architecture, plan) and execution needs to be ramped-up.
Working in small, frequent iterations has its own benefits, but it is only a part of a bigger picture. At Berg Software, we do software development based on Agile/Lean principles, and Continuous Delivery/Continuous Integration flows:
- build quality in
- do continuous testing
- split the work in small batches: deliver outcomes quickly, get frequent feedback to correct the course (if needed)
- pursue continuous improvement
Before any code is written make sure that the software development team understands your business goals and desired functions/features set, then translates them into building blocks such as technologies, architecture, iterative plans and frequent deliverables. This way, you will be in full control when it comes to timeline, quality and the ability to change things if/when needed.
4. How do you go to market?
“Most start-ups don’t fail because they can’t build a product. Most start-ups fail because they can’t get traction.” That’s why we looked into several strategical and tactical aspects of traction:
In order to define your positioning, you need to clarify:
- Client’s competitive alternatives
- Your product’s unique functions / features / attributes
- The client benefits (resulting from your unique qualities; ideally confirmed by objective third parties)
- The market category
- Relevant trends
Technology adoption lifecycle
In order to get market traction, a digital product first has to appeal to Innovators and Early adopters:
— The innovators search for new technology products. Winning them helps to bring endorsements, which in turn helps to reassure the further groups on the market.
— The early adopters are usually not technologists but appreciate and understand technology as a source of competitive advantage for their own businesses.
Targets & the growth equation
Do you know where you need to focus (i.e., what are the most important metrics for your customer acquisition)? Try a “growth equation”.
Let’s say you are Amazon, so “your” equation might look like this:
x Product inventory per vertical
x Traffic per product page
x Conversion to purchase
x Average purchase value
x Repeat purchase behaviour
= Revenue growth
There are many tools and places to reach potential clients, ranging from paid, to “organic”, to “viral”. Depending on the problem, try experimenting with the most appropriate channel(s), for example:
- Do people search online for solutions? Try Search Engine Optimisation (SEO) or Marketing (SEM).
- Do existing users share your product? Try referral programs / virality.
- Do the potential clients already use a different platform? Try integrations and/or partnerships.
- Do they have a high lifetime value? Try paid acquisition.
5. How do you scale?
The benefits that got your digital product/service adopted by the first wave of innovative users/clients are not the same that will get you traction with the mainstream market. At this point, you will most likely face very pragmatic individuals who will prefer to wait, instead of debugging your product – and therefore look for a safer, slower, measurable-benefits adoption. They will want a mature, standardized digital product/service – which in turn, should boost your growth and profits (through bigger sales volumes at lower development costs).
Scale your business
- Focus your efforts on the right niche (instead of selling “everything to everyone”).
- Build a stable digital product/service that fulfils the early majority’s needs.
- Win “safe”, referenceable clients to generate notoriety and authority/market leadership (i.e., “be the big fish in the small pond”).
- Always: under-selling and over-delivering is the best way to build buzz, then trust.
Scale your technology
In this technological age, one should feel comfortable using cloud.
For example, AWS covers everything(?) from storage, computing, migration and security; all the way into specifics like developer tools, IoT/internet of things, ML/machine learning and management & governance.
In their own words, “AWS can seem overwhelming. A cloud-native paradigm of building infrastructure can be a radical departure from the traditional on-premises way of doing things.”
Scale your team
Why software outsourcing?
- You have limited access to skills within your local talent pool.
- You need to scale-up your application (and the team) quickly.
- Rapid go-to-market.
- Short-term projects that don’t need a permanent, dedicated development team (e.g., developing an MVP).
- You need to lower your total costs, possibly with a pay-as-you-go scenario.
- You want to keep focusing on your core expertise (a specific technology, or sales and marketing etc.)