A Methodical And Innovative Approach to Digital Venture Cost Management

DigitalIntelligence

In any digital venture, managing cost tops the list. The primary concern of technology leaders for digital ventures is reducing cost and making their products and services competitive in the market. A well-organized, methodical and innovative approach is vital for the success of ventures.

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Cost management is a complex task. Many factors play important roles. Cost-cutting has a high focus. However, while cutting the cost, we may face the risk of compromising quality. This is an undesirable situation. Therefore, we need organized, methodical, and innovative ways to address this issue.

In this post, I provide an overview of a framework to approach cost management in digital ventures. This article is a follow-up content on Financial Consideration for Digital Ventures in News Break. In the previous article, I introduced cost considerations. In this article, my focus is on providing a practical approach to reduce cost, increase profitability, accelerate delivery, and delight consumers.

Digital venture leaders need to follow a methodical approach considering innovation to manage the cost and contribute to the solution viability, delivery, and profitability to stay competitive in the market.

A top-down at the strategic level and a bottom-up approach at the tactical level must be applied depending on the requirements and use cases of the venture. Both approaches can add different values to solution quality.

At a conceptual level, we can visualize the business and technology processes as the top tier. And we can imagine the infrastructure at the bottom tier. These two domains can independently be transitioned and transformed using many parallel activities. This approach can open new doors to innovation.

However, the approach must be integrated. Innovation requires coherence. An integrated approach is essential as there can always be a myriad of dependencies and interdependencies from multiple angles in both top-down and bottom-up approaches.

Once a business organization has an agreed and approved transformation strategy, the digital venture leaders can refine the plan and convert it into transparent architectural, technical, and design constructs.

The digital strategy document is a critical artefact to bring all stakeholders on the same page. The digital solution leader can then identify the necessary dependencies among these domains based on the short term, midterm, and long-term considerations.

Using the digital strategy as a map and considering the dependencies, the digital solution leaders must develop a high-level transition and transformation roadmap to inform the sponsoring executives.

This roadmap can indicate the key outcomes, timelines, and order of magnitude costs for the overall transition and transformation activities.

These indicative points initially can be at a very high level as there may be many factors affecting timelines, resources, and associated cost at later stages. However, this critical roadmap should also include adequate information for the stakeholders to understand the solution scope and goals.

Once the digital transformation roadmap is set, the solution leaders can create a comprehensive viability assessment. This viability assessment artifact should consider the current state of the scoped initiatives, their indicative future state and the strategies to reach the end state.

This viability assessment must include key risks, constraints, assumptions, and dependencies. The viability assessment can be a valuable information tool for sponsoring executives to make informed decisions and for other stakeholders to buy into the initiative.

The viability assessment can be an excellent report for proactive risk management at the earlier stages of the solution lifecycle. It also helps clarify the assumptions and address the issues at an earlier stage.

One of the most significant challenges in managing digital ventures' risks and issues is dealing with dependencies and interdependencies. Identifying them as early as possible can substantially contribute to the health of digital initiatives.

After reviewing and approving the viability assessment, the digital solution leaders can delve into collecting the solutions' high-level requirements based on the domains mentioned earlier.

As dealing with those domains' needs can be daunting, the digital solution leaders can delegate the requirements collection process with the domain, and program architects, technical specialists, project managers, and business analysts carefully considering their skill sets relevant to the requirements management.

In the requirements gathering phase, the digital solution leader's role is to coordinate and facilitate the requirements management team activities undertaken by multiple architects, technical specialists, and business analysts. Project managers keep these talented team members on track as requirements gathering can be a project by itself.

After requirements are collected and analyzed reasonably, the next important activity is to prioritize the needs based on business impact. Technology and business go hand in hand in developing digital ventures. They are two essential metaphorical legs allowing walking.

The digital solution leader needs to develop a set of criteria to prioritize the requirements based on factors depicted in the digital strategy and roadmap, including the sponsoring executives' financial and business priorities.

Only after when the requirements are crystalized, the technical team are allowed to start architectural, design, and deployment activities. Otherwise, changes in critical requirements and conditions can cause a lot of risks, especially in financial terms.

Rework can cause a major financial impact in digital ventures. Clarifying, agreeing, and approving requirements with input from all key stakeholders can substantially reduce rework. Less rework equates to speedy delivery.

As an innovative solution, harvesting re-usable materials can reduce cost and speed up solution delivery. A review of venture assets and curating them for the new initiative can save substantial funds to the venture.

Following this straightforward, methodical approach, digital venture leaders can be on top of issues and risk. Hence, they substantially contribute to cost control proactively.

Reducing cost can increase the financial viability of the digital solution. Also, the leaders need to introduce innovative approaches continuously as a cost reduction enabler. Innovation can be the dominant player for overall cost management in complex digital ventures.

As innovation is a comprehensive topic in digital ventures, I plan to create a post covering various aspect of innovation for these digital initiatives, including cost management and investment returns. Adding innovation can make the biggest difference in the success of digital ventures. These ventures survive and thrive with innovation.

Thank you for reading my perspectives.

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I write about important and valuable life lessons. My ultimate goal is to delight my readers. My content aims to inform and engage my readers. Truth, diversity, collaboration, and inclusiveness are my core values. I am a pragmatic technologist, scientist, postdoctoral academic and industry researcher focusing on practical and important life matters for the last four decades.

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