The concept of a cost-effective and low-risk digital transformation is not only possible, but increasingly essential. This approach opens doors to new opportunities and avoids the pitfalls of previous high-cost endeavours.
The Perils and Potential of Digital Transformation
Historically, digital transformations have been marred by exorbitant costs and disastrous outcomes. The case of TSB, a building society that faced a £48m penalty following a core migration debacle, is a prime example. Similarly, the government’s Universal Credit program, plagued by a five-year delay and a £3bn overrun, stands as a testament to the challenges in this domain. However, the trend is shifting towards strategic, low-cost initiatives that promise substantial ROI without the associated risks.
Cost-Effective Strategies with Open-Source Software
A significant strategy in cost reduction is the adoption of open-source software. For instance, substituting Microsoft Office with LibreOffice represents a shift to a free alternative without compromising functionality. A notable example is Grammarly, a company valued at $13bn (£10bn), which significantly reduced its tech stack costs by utilising open-source solutions from VictoriaMetrics for its observability and monitoring service. This switch led to a 90% reduction in their Amazon Web Services bill, exemplifying the successful implementation of open-source software.
Front-End Transformation Using Low-Code and No-Code Solutions
Shawbrook Bank exemplifies the strategic use of pre-built software for front-end redevelopment. By employing a low-code solution from Pegasystems, Shawbrook enhanced its customer experience for unsecured loan applications. This integration not only accelerated the loan processing by 75% but also reduced maintenance hours significantly, demonstrating the efficiency of such cloud-based solutions.
Physical Operations: Low-Cost Digital Upgrades in Warehousing
In the physical sector, companies like DCK Group have leveraged digital transformations to enhance efficiency. By adopting a ‘bring your own device’ policy and integrating Scandit’s data capture software, DCK improved its warehouse operations, halving processing time and significantly reducing manual errors, all within a budget of £50,000.
“Introducing a ‘bring your own device’ policy transformed us pretty quickly, bringing us much closer to our remote teams in the field,” says Oliver Simons, operations development director at DCK. “It allowed us to start adopting new technology and new ways of working, which had been much further down our initial roadmap. But it became possible very quickly because we had this transformation in place.”
Public Sector Digital Transformation: The Case of Estonia
In the public sector, Estonia presents a compelling model with its X-Road platform, offering a unified digital experience across 600 services at a remarkably low annual IT cost of less than 200m euros. This model, now being adopted by over 20 countries, stands in contrast to the more traditional, cost-intensive approaches prevalent in other nations, including the UK.
Conclusion
The movement towards low-cost, low-risk digital transformations is gaining traction across various sectors. This paradigm shift, focusing on strategic, targeted upgrades using open-source, low-code/no-code, and efficient software solutions, demonstrates that effective digital transformation need not be synonymous with spiralling costs and unfavourable outcomes.