These days, if your company isn't engaged in or at least thinking about digital transformation, you're in a distinct minority.
The trend toward digital transformation was already well under way by the time the 2020s rolled around — but the arrival of the COVID-19 pandemic at the beginning of the decade made it more urgent than ever, and greatly accelerated the shift.
But succeeding at digital transformation can be harder than it might appear — and it's not enough to just invest money in new technology. Many companies don't succeed at their goals because they don't have the right understandings in place at the outset.
Successful digital transformation requires careful planning, realistic goal-setting and continuous assessment. In fact, one of the single most important factors in determining the success of digital transformation is understanding how to correctly measure that success.
So first, let's talk about what we mean when we talk about digital transformation. And then we'll look at how to effectively measure the success of your efforts.
Defining Digital Transformation — And Why It Matters
Digital transformation means more than just investing in a new ERP system or moving your data to the cloud. True digital transformation is always driven by a higher sense of purpose. It involves changing the way your company uses technology to fulfill its goals — and achieving this transformation may entail cultural shifts, as well as new technology.
To better understand that, let's consider the purpose of digital transformation. Why do you need to transform digitally? Because it ensures business growth and helps you stay ahead of your competitors.
Sticking to legacy systems won't help you in an accelerated digital landscape. You need the latest digital tools in your arsenal — not just to keep up with the digital Joneses, but to make sure you can set the kind of aspirational goals that fuel real growth.
Companies don’t pursue digital transformation for the fun of it. Transformation, after all, is a slow, amplified version of change — and change hurts. Businesses pursue digital transformation to avoid financial ruin.
Because those who fail to modernize will, in due time, fail to win and retain customers. And where will all those customers go? To competitors who have modernized and are delivering experiences that meet modern expectations.
Why Measurement Matters: Keeping the Pot Boiling
Digital transformation isn't a one-and-done kind of thing. It's a continuous process and to reap the benefits, you need to continually monitor your results.
In fact, with the increasing rate of innovation in tech and business, it can be difficult for a digital transformation strategy to stay relevant beyond a few years. For this reason, you must reassess your strategy every two to three years, to avoid investing in a strategy that may have already become obsolete due to a sudden disruption in tech or organizational workflow processes.
Think of your digital transformation as a pot of water you need to keep boiling — and that won't happen unless you continually apply heat so it doesn't cool off. Maintaining a state of equilibrium and keeping your momentum up doesn't just happen on its own — it requires energy and effort. Otherwise, you're looking at entropy.
So how do you know whether the digital transformation is working at your organization? Establishing the right metrics and continually monitoring them is how you know if the pot has stopped boiling — so you can figure out what needs to be done about it.
How to Measure Success in Digital Transformation: Creating Metrics That Matter
Here are some guiding principles and insights that can help you keep your digital transformation at a rolling boil.
First, you need to establish metrics that matter. What do we mean by that? The metrics must reflect the goals of the organization. You only want metrics that will drive your company in the direction you want it to go.
It's also important to avoid unreasonable expectations. Make sure the goals you're setting are realistic and achievable. Remember that your team members have day-to-day responsibilities, and their time is finite. Ask yourself if you'll be able to dedicate the number of people you need to implement your digital requirements.
Some other helpful considerations you may want to keep in mind, based on what we've learned from previous engagements:
Troubleshooting Your Metrics
Here are a few possible challenges you might encounter with your metrics, and how to overcome them.
Examples of Metrics to Measure Digital Transformation
Here are a few examples of metrics you may want to track, depending on your goals:
Active usage metrics: Successful digital transformation requires sustainable technology adoption. A great KPI to measure is how actively your digital assets are being used. Compare the number of licenses purchased to the number of users actually using the software. If more than 85% of users are using the software, you can assume the software adoption is successful, for example.
User engagement and participation level: Some metrics that describe employee engagement could include – Net Promoter Score, Exit Rate, Employee Satisfaction Index and Bounce Rate. A McKinsey report says that organizations with a Chief Digital Officer are 1.6 times more likely to ensure success than others.
Workforce productivity: Employee productivity is a common goal with digital transformation. Workforce productivity is the value or volume of output an employee can deliver relative to time.
Cost of digital initiatives: Between 2020 and 2024, direct investments into Digital Transformation are projected to reach $1.8 trillion. Successful initiatives can create more revenue thanks to your digital investments.
Want to learn more about how Columbus can help your company plan and execute an effective digital transformation, and then measure your success? Get in touch with us today.