Evolving business through dynamic investment
Evolving business through dynamic investment
Insight

Evolving business through dynamic investment

Deliver value and innovation faster to the customer by combining IT, Finance, and the business in a venture capitalist approach.

The future of the business relies upon a connected enterprise. The front, middle and back office must run seamlessly to meet or exceed customer expectations, but as a digital transformation ushers in a new customer experience, IT, Finance and the business itself need to adopt an enhanced methodology similar to that of venture capitalist firms. Using dynamic investment, organizations can become a frictionless value chain by incorporating IT’s agenda into the overall business strategy and investing in smaller IT tasks for quick wins and fast failures.

Evolutionary, not revolutionary

With the customer’s experience and expectations at the forefront of the business, the organization needs to leverage IT to its fullest, which proves difficult with traditional yearlong budgeting constraints. Instead of one budget, IT should look to break monolithic projects into smaller items that can develop and see quick results.

Dynamic investment is the solution—an iterative funding model that embraces the venture capital firms’ approach of placing small bets on new businesses in hopes of success. Likewise, IT, Finance and business leaders need to work congruently to create a leaner IT model and an agile business plan. With support from Finance, the business can section off certain products or functions for technological investments.

By starting small, IT can leverage technologies to support the business needs, to automate specific tasks and provide better intelligence for customers. The business can then identify value streams and shift toward funding those, instead of projects. This allows for the “investment” part of the funding model where the business places “bets” on certain IT technologies and see if they deliver a return on investment. If the “bet” is successful, the new technology will be integrated gradually into other areas of the business.

The process is ongoing, not annual, as IT and the business evolve to find value and develop those streams, hence “dynamic.”

“You're going to have to make these evolutionary changes. It doesn't have to be a revolution. You don't have to completely flip the organization upside down but know that this is coming. Different industries, and different speeds, and different sizes of organizations vary, but figure out how to adapt and not resist this change.” — Jason Byrd, Managing Director, Technology Business Management, KPMG (US)

Cultural shifts

This action plan serves quick wins as “capital” is reinvested into winning technology, products and services. However, like investments in the marketplace, failure will occur. The business must be able to tolerate these times as they can lead to bigger payoffs. Fast failures also allow the company to learn what didn’t work and realign from an organizational standpoint, but the business must understand that mistakes and opportunities come from experimentation. Companies who undergo a cultural shift to stop seeing failure as a bad outcome and instead encourage it, will find and take advantage of opportunities as they arise. 

“‘You miss all of the shots you don't take,’ and that's true with IT organizations. You're going to have to shift that mindset. We're going to make a lot of these small bets, meaning a lot of different decisions, before they are well thought out. Most of those will not pan out, and that's a big mind shift from how most organizations think today.” — Rob Breakiron, Technology Advisor, KPMG (US)

With CIOs, CFOs, technologies and business leaders working seamlessly to integrate products and solutions, the business can deliver value and innovation to their customers at market speed.

However, tech leaders must increase their influence and spread value over the organization, which can prove difficult, especially in some industries where innovation is not fostered by the chief digital officer or chief information officer.

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