Digital Transformation: Should You Hire a Consultancy or Build an In-House Team?

Digital Transformation: Should You Hire a Consultancy or Build an In-House Team

Expertise of Digital Transformation Companies: The specialized knowledge and experience these companies bring can greatly accelerate and improve the success rate of digital transformation initiatives.

Choosing the Right Partner: When selecting a digital transformation company, focus on their track record, expertise in relevant technologies, and their ability to align with your business’s unique needs.

Balancing In-House and External Expertise: While external companies offer valuable insights and rapid deployment, developing in-house capabilities ensures long-term sustainability and alignment with business goals.

Cost-Benefit Analysis: Consider the long-term benefits and cost savings that come with successful digital transformation, weighing them against the initial investment in a consultancy.

Continuous Evolution: Digital transformation is an ongoing journey. Whether partnering with a consultancy or building an internal team, businesses need to foster a culture of continuous improvement and adaptation to new technologies.

Digital transformation is no longer an option for most businesses – it’s a necessity for survival and growth. However, embarking on a digital transformation journey can be daunting. One of the first big decisions businesses need to make is whether to work with an external digital transformation consultancy or build an internal team. Both options have their own sets of pros and cons. 

In this article, we’ll break these down so you can determine the best route for your organization.

The Case for Digital Transformation Consultancies

Digital transformation consultancies like digital transformation companies bring specialized expertise and experience implementing major business and technology changes for a wide range of companies. According to recent industry research, nearly 75% of digital transformation initiatives fail due to lack of expertise and proper planning. This is where working with an established transformation consultancy can pay major dividends.

Some of the key benefits of partnering with a digital transformation consultancy include:

  • Proven Methodologies: Experienced firms have well-defined processes, frameworks, and tools that have been refined over years of engagements. This can greatly increase your chances of success.
  • Deep Expertise: Consultancies have access to subject matter experts across a wide range of emerging technologies like AI, cloud computing, and customer experience platforms. Tapping into this expertise can accelerate your transformation plans.
  • Best Practices: By working with various clients across multiple industries, consultancies are constantly updating their knowledge of the latest techniques and best practices for digital transformation. They can apply these learnings to help you transform effectively.
  • Faster Deployment: Getting up to speed on new technologies, upskilling employees, designing processes etc. can significantly slow down deployment velocity for in-house teams. Consultancies can help you bypass these issues leading to faster time-to-market.
  • Cost Savings: Though consultancy fees are definitely not insignificant, not getting digital transformation right the first time can end up costing your business much more in the long run according to leading research reports. Their fees may seem worth it if transformative success is your top priority.

The Case for Building an In-House Digital Transformation Team

While external consultancies provide immense value, building digital capabilities within your company also has some compelling benefits:

  • Deeper Insights About Your Business: Internal teams often have a richer, nuanced understanding of what makes your business and industry tick. They can apply this understanding to customize transformation initiatives as per your specific needs.
  • Better Communication: Having constant access to your transformative vision helps in-house teams achieve tighter strategic alignment and maintain clear communication across the many functions digital changes impact.
  • Care More About Long-Term Success: External consultants eventually move on from a project. Your internal team will be there through the peaks and troughs, fully invested in realizing your goals. Their incentives are aligned with your business’ overall transformative success.
  • Cost Savings Over Time: Though you need to initially invest in building a team, over 3-5 year periods, handling execution with an in-house staff can optimize spend compared to recurring high consultancy costs.
  • Internal Skill Development: Digital capabilities you build internally will continue benefiting your organization by kickstarting a culture of continuous innovation, learning and improvement.

Things To Consider Before Digital Transformation:

As depicted above, both routes have alluring advantages. The approach best suited for your company depends significantly on assessing factors like:

  • Current Internal Digital Maturity Levels: What existing strengths or capability gaps need to be augmented? Do you even have the wherewithal to execute complex initiatives without external expertise?
  • Leadership Commitment to Transformation: Is there C-suite sponsorship to provide necessary vision, funding and momentum to multi-year programs?
  • Scope and Complexity of Transformation Goals: Are you implementing point-technology solutions? Or are you aiming for risky, wholescale business reinvention? Risk appetite should match capabilities.
  • Timelines Related to Business Imperatives: Do you need transformative solutions urgently to capture fleeting market opportunities? Or can you take 3+ years to gradually build competencies?
  • Access to Digital Talent: Can you realistically attract and retain the quality of scarce digital experts your transformation demands?

The need and context for every company’s transformation journey is unique. But irrespective of whether you decide to engage specialized digital transformation companies or develop in-house teams, what’s most vital is to start taking decisive action NOW if you haven’t already begun digitizing key operations. Markets shifting increasingly online means digital-first is the only way forward for most corporations wanting to unlock new potential for value creation.

Frequently asked questions: 

What are some key questions we should ask consultancies before hiring them for digital transformation?

You’ll want to inquire about their specific experience in your industry, ask for client references, understand their project methodology, assess cultural fit, evaluate their team’s skills, discuss ownership of work product, and align on clear objectives and measures of success.

How much does it typically cost to hire a digital transformation consultancy?

Pricing can vary greatly depending on project scope, duration, level of expertise needed, number of resources engaged, and geographic location. Most firms will provide customized quotes based on your needs. Smaller projects may range from $50,000 to $500,000+ while multi-year partnerships usually land in the millions.

What are some signs we may want to switch from an external consultancy to an in-house digital transformation team?

Clear signals could include realizing your needs have expanded, wanting more customization, needing tighter strategic alignment, identifying capability gaps in the consultancy, seeking cost optimizations, or deciding to build transformational skills internally.

If budget wasn’t a restraint, what would be the ideal scenario for maximum success?

Ideally you’d partner closely with both – leverage experienced consultants to provide invaluable expertise during initial planning and foundational phases while simultaneously building internal capabilities to eventually manage execution and run optimized digital operations long-term.

Next Steps

Still unsure about the best approach for your company? Connect with the digital transformation experts at Codewave for an obligation-free consultation. 

Our specialists can provide tailored advice about the ideal strategy after thoroughly analyzing your organizational needs and capabilities. Book a 60-minute free session now through our website to get started right away. 

Delaying action can severely reduce the window of digitally driven opportunities your business can leverage, so let’s chat ASAP about how Codewave can help you implement a winning digital gameplan.

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