Digital transformation: Are you using the right metrics?
Blog: The Enterprise Project - Digital Transformation
Digital transformation: Are you using the right metrics?
December 6, 2021 – 2:00am
For any digital transformation project to succeed, you need a well-laid-out road map, clear objectives, and bite-sized goals to mark the milestones. And it’s important to put those plans into action and measure their success against the pre-defined relevant metrics.
The pandemic made the pace of digital transformation a key performance metric by making it urgent for enterprises to embrace and accelerate digital. Now it’s time to think beyond speed and measure the success of digital transformation against metrics that align with business goals.
5 digital transformation metrics that matter
Here are five key digital transformation metrics that hold value for enterprises across industries.
1. Operational efficiency
This is one of the most important parameters to measure the success of digital transformation projects. Traditional, manual, and paper-/email-based methods of work are no longer sustainable in the digital world. Organizations that can get work done faster, better, and at a fraction of the cost are the winners of today and tomorrow.
[ Where is your team’s digital transformation work stalling? Get the eBook: What’s slowing down your Digital Transformation? 8 questions to ask. ]
Indicator: Digital transformation success lies in reducing your operating expenses. Find out how many hours have been saved with automated processes. This should be reflected in the form of a lower turnaround time.
2. Employee engagement and productivity
A great customer experience warrants empowered employees. Organizations need to automate critical processes so employees across departments can focus on value-oriented activities rather than transactional and repetitive, mundane activities. They also need to enable seamless collaboration within the organization as well as its partners and third-party service providers. Employees should be able to access contextual information anytime, anywhere.
Digital transformation entails a company-wide change in culture that needs to be sustainable in the long term as it has a major impact on employees.
Indicator: Digital transformation success lies in improving employee productivity, measured as revenue per employee.
3. Customer longevity
Today’s digital-native customers are one of the primary drivers of digital transformation. While new customer acquisition is essential, retaining those customers, building loyalty, and bringing down churn are equally important.
To improve customer longevity, ensure that your customers have an excellent experience at every touchpoint. Improving the customer experience is not just about the front end; it’s also about how your front and back end interface to process your customer requests seamlessly.
Indicator: Digital transformation success lies in the ability to cross-sell and upsell and understand your customer retention/lifetime value. You should be able to deliver hyper-personalized contextual responses, an intuitive and connected experience across all channels, and a low acquisition cost.
4. Speed of innovation
Organizations that can innovate quickly by responding to new market opportunities and customer demands will remain relevant in a competitive market. Leaders should focus on building and investing in capabilities – be it technology or talent – to help predict the market’s direction and stay ahead of the curve. They need to reimagine how they can take their value proposition and offerings to market in innovative ways.
Indicator: Digital transformation success lies in the number and business value of innovations brought to market. For instance, the insurance industry is witnessing an accelerated adoption of digital, and it’s vital to assess the business value of the new digital services. Companies that are able to leverage technologies like AI/ML, predictive analytics, etc. will service their customers faster and be in the winning category.
5. Agility at scale
The concept of agility today is no longer limited to IT teams and software development. Organizations that are succeeding at digital transformation initiatives reimagine their organization as a network of outcome-oriented, interconnected groups. These teams specialize in skill sets, and they function as cohesive units focused on delivering business value at speed. To achieve this, organizations need to reexamine their current operating model and mold it in a way that is supported by optimizing strategy, people, processes, and technology.
Indicator: Digital transformation success lies in cross-functional teams delivering business value at speed – for example, a bank leveraging low code and cloud-based platforms to quickly shift its branch-based services online after the pandemic.
Focus on the iterative process
Remember that digital transformation is essentially a learning process. There is no fixed formula, and there are no guarantees. You must experiment with processes, people, technology, and resources. Sometimes you will fail, and you must learn from those instances to improve your strategy.
The key is to improve iteratively, which speaks to the importance of having a supportive platform consisting of content, process, and communication yielding a unified experience for employees, customers, and partners.
Finally, steer clear of vanity metrics and instead focus on metrics that clearly indicate your progress in the DX journey and how far you are from your goals.
[ Want more advice? Watch the on-demand webinar, The future of leading digital innovation: What’s next?, with Nancy Giordano, plus Red Hat’s Margaret Dawson and IDC’s Nancy Gohring. ]