February 9, 2023

There’s general agreement among business and IT leaders that true digital transformation (DX) is a continuous and adaptive process – there’s not necessarily the finish line or endpoint.

That certainly doesn’t mean digital change initiatives shouldn’t have strategic goals plus milestones – and clear ways of measuring your progress and outcomes – along the way.

Yet developing, tracking, and acting on electronic transformation metrics can be tricky. Digital transformation is an inherently broad term, and its continuous nature may at first seem like it doesn’t lend itself well in order to measurement. Measure you must , however, and there are indeed good approaches for doing so.

While you’ll want to tailor plus align your own metrics and/or KPIs to your specific goals, here are five examples of how leaders can measure digital transformation achievement.

1. ROI on digital modification

Electronic transformation itself has become big business:   IDC estimates   that will global spending on electronic transformation investments will hit $3. 6  trillion   in 2026. That’s a lot of capital. No matter how large or modest your own organization’s DX-related spending will be, you’ll need a way in order to track your return on investment (ROI) over time.

“Since DX involves lots of upfront investment like technology adoption, user training, and hiring, leaders should look for a clear correlation between these opportunities and revenue, ” says Ariel Katz, CTO of  Sisens e .

Because of the ongoing and evolving nature associated with many DX initiatives, traditional ROI calculations can become tricky. As we’ve  previously noted : “[It]’s] easier said than done with projects that cross functional and business boundaries, change how a company goes to market, and often fundamentally reshape interactions along with customers and employees. ”

[ Get a primer on all things DX:   What is digital transformation?   ]

But that does not let you off the hook. You need to define up-front exactly how you’ll measure and show ROI plus the economic impact of your efforts, whether you use revenue as Katz suggests or another company metric.

For more on this, check out our previous article,   Digital transformation ROI: How to check a project’s payoff.

2. Time to marketplace

If money (whether earned or even saved) is usually the first pillar of most business metrics, then time is another. That could be time spent or saved (more on that will in a moment), but it’s also in the sense of pure speed.

“Time to market ought to be one of the most critical digital transformation metrics right now for enterprises across industries, ” states Skye Chalmers, CEO of  Image Relay . “The market impact of a digital transformation project is all about the speed: If you don’t cross the finish line 1st with compelling new customer [or] employee experiences or even other electronic modernization initiatives, your competitors will. ”

So while an overall digital transformation strategy may not have an endpoint, per se, the objectives or milestones that comprise that technique should have some time-based measurement. And from Chalmers’ point of view, the speed with which you can deliver should be a key factor in decision-making and dimension.

Focusing on the time-to-market metric “will directly improve an enterprise’s competitive position and standing along with customers, ” Chalmers says.

3. Person hours to working prototype (H/wP) and dollars to operating prototype ($/wP)

Jon Nordmark, CEO of  Iterate. ai , notes some good news upon the time-to-market front: Advances in AI/ML, easier data integrations, low-code/no-code tools, and other technologies are enabling teams to move faster compared to ever.

Yet as companies shrink development cycles plus embrace strategies such as the  minimum viable product (MVP)   approach, they’re also under pressure to lower costs. (After all, who hasn’t had to operate under pressure to “do more with less, ” or in least “do more with the same? ”)

“To meet these dual requirements associated with faster advancement and lower costs, we believe within tracking person-hours and bucks spent per working prototype, ” Nordmark says. “The ‘working’ part is essential: Well-built MVPs need to connect to legacy systems and existing application stacks in order to get deployed quickly and avoid technical debt. ”

Nordmark and team express these measurements while (H/wP) plus ($/wP): “Optimally, these metrics have small numerators and large denominators: CIOs along with other technical leaders will likely need to get like many working prototypes done as possible within a given time period, ” he says.

Together, they include a way to determine and balance time-to-market plus cost considerations.

“Tracking (H/wP) gives a good measurement of time-to-market and overall growth load associated with specific electronic transformation endeavours, ” Nordmark explains. “The ($/wP) metric accounts for almost all the additional elements that might go into a prototype: developer period, external technologies, project management, designers, legal, and admin. ”

Nordmark’s team recently completed the prototype that came in around 17x faster (3 weeks versus 52 weeks) plus 12x cheaper ($75K versus $1M) than a competing bid, for example. “The functioning prototype was production-ready at the end of that time (connecting in order to existing AI engines, on-premise IoT systems, and existing customer databases) and now operates in more compared to 3, 500 stores within the U. S. and Europe, ” Nordmark states. “Hitting both time plus cost considerations is critical for digital transformation projects, and that’s why all of us like to look at the particular [H/wP] and [$/wP] connection. ”

4. Usage KPIs

For each customer plus employee-facing initiatives, new electronic products – whether it is a customer software, process automation, employee tool, or anything else under the digital alteration banner – can typically be measured in terms of their uptake and usage as well.

[ Also read:   OKRs vs. KPIs: What’s the difference?   ]

“Leaders should monitor – plus act on – ownership and continuing usage metrics across the digital change for better lifecycle funnel, ” Katz says.

These are sometimes referred to as user engagement metrics and include:

  • Daily/Weekly/Monthly Active Users (DAU/WAU/MAU)
  • Adoption rate/percentage
  • Time spent on specific features
  • Churn

Benchmarks (or a “before” picture) are usually important, as is the clear idea of what success will look like. It’s not necessarily valuable to say “users spent X amount of period about this new tool” but to be able to show how that’s connected to broader strategic targets.

Ultimately, along with KPIs (or other measurement tools such as OKRs), remember that will you get to determine and/or tailor them for your particular organization and its goals.

More upon digital shift

5. Productivity KPIs

Katz information that while measurements like RETURN ON INVESTMENT or consumer engagement are usually output metrics, it’s also useful to measure the inputs needed in order to produce those outcomes, especially in terms of the investments you make in people. This is definitely particularly essential when your digital transformation initiative will require groups to build/learn/use new systems to achieve business goals.

Katz refers to this category because productivity KPIs – this is definitely an area where leaders may customize to their own teams and goals, yet Katz shares some examples of input-focused questions in order to ask – and indicates then determining a method to calculate whether you’re hitting your own targets:

  • Do employees have all the particular digital resources needed to be successful?
  • Are they efficient?
  • Do they have the right digital skills?
  • Do these people get the right coaching?

“I’d build specific KPIs close to these questions and then gauge, ” Katz says.

[ Discover how priorities are changing. Get the Harvard Business Review Analytic Services report:   Maintaining momentum on digital transformation . ]

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