The stats CEOs need to measure digital transformation success
Thursday, March 28, 2019 - Mark Dyer
Against a backdrop of political and economic uncertainty, CEOs are increasingly focussed on profit and growth. To achieve these goals, leaders are looking for ways to evolve their operations, including the exploitation of digital technology.
However, digital transformation can only be achieved at scale if it is driven systematically. And that relies on having a set of clear digital success criteria. As Mark Raskino, vice president and Gartner fellow says: “you cannot scale what you do not quantify, and you cannot quantify what you do not define.”
Despite this, half of CEOs have no measures for digital success.
In this article, we explore the key performance indicators (KPIs) that will help you quantify the impact of your digital initiatives.
What Are Digital KPIs?
Business performance is often measured using standard KPIs aligned to shared commercial values like profit and loss. Digital KPIs are more difficult to define because each enterprise will have different goals.
To help establish which KPIs will work best for your organisation consider:
- What digital means for your business - are you creating additional online revenue streams or enhancing internal operations?
- Any metrics you need to change - which stats will remain useful for measuring digital transformation and where will you need add new measures? For example, if you intend to add digital revenue streams you’ll need to split out traditional sources of profit from digital to enable accurate measurement.
Wherever you are on your journey of digital transformation, the following KPIs will help you define and measure the success of your digital transformation.
Salient Digital Transformation Stats for CEOs
Define Uptime Goals in the Context of Wider Business Objectives
Investment in technology can only deliver a return if systems are usable. But measuring uptime alone can be misleading. For example, some systems use a virtual software layer: while the network might be working properly, if the virtualisation layer isn’t, users will still have an issue.
Or what about the website that meets SLAs with 99.9% uptime but crashes for an hour during the busiest day of the year? Without context, statistics can be misleading. Which is why it’s more important to assess the impact of IT systems and tools on overall business goals than it is to measure uptime as an isolated metric.
As Gartner explains: “In a European car maker’s manufacturing plant, a car rolls off the production line every 90 seconds. One hour of line stoppage due to IT issues means 40 “lost” cars. This is how the IT department puts digital risk in a business context, by reporting on inventory, revenue and other direct business impacts instead of downtime.”
Measure Talent Gaps
Investing in technology is only useful if you have skilled people to use it. Leaders cite a lack of capability in the workforce as a major inhibitor of digital business progress.
To ensure you can make the most of your digital investment, focus on talent development within digital roles. Identify where your workforce is now, where you need them to be and measure any gap. Then decide how to develop your people or bring in outsourced support to bolster the team.
With so many other businesses also seeking digital talent, measuring your progress in terms of attraction, development and retention are key digital KPIs.
Quantify Culture Change
The most important cultural changes include making the business more proactive, collaborative, innovative, empowered and customer-centric.
You can measure progress towards these goals by including specific questions in your employee engagement survey or ongoing pulse surveys throughout the year. The results will give you year-on-year statistics to use as a yardstick for cultural digital change.
Assess Digital Impact on Revenue
Digital transformation should help to bolster your bottom line making revenue a top digital metric. Depending on your transformational goals, this could be assessed by:
- Defining and evaluating sources of digital revenue
- Quantifying reductions in administrative costs, operational expenses and customer acquisition costs
Which works for your business will depend on your digital initiatives and whether their impact is internal (employee and operations focussed), external (customer focussed) or a bit of both.
Rate User Experience and Engagement
When your digital transformation mainly impacts employees, it’s important to understand how well new technology has been received.
As more business leaders are beginning to realise, user experience is tied to employee engagement, productivity and overall business efficiency. Which impacts on customers and therefore business outcomes.
Opportunities for employees to provide feedback enables them to voice any challenges they’re facing. And gives your IT team the opportunity to ensure digital systems are fit-for-purpose.
Score Customer Experience
Customer experience is one area of digital transformation that’s been woefully ignored, so measuring success in the following ways is an opportunity to get ahead of your competitors:
- Number of customer service requests
- Speed of response to customer need
- Quality of service experience (like how fast a customer can purchase an item online)
- Online reviews (both positive and negative)
- Other forms of direct or indirect feedback
Net promoter scores are a great way to establish your customer experience. This approach subtracts the negatives from the positives giving you a score you can track and a solid insight into what’s working well and what isn’t.
A Real-Life Example From Ford
Considering KPIs in isolation can be tricky. So here’s an example of how Ford measures the virtual reality (VR) element of their digital transformation.
Ford are one of the early adopters of VR technology using it help them visualise car designs in 3D. Combined with other, intuitive design software, Ford are able to get employees quickly up to speed removing the need for costly CAD training. Plus the technology gives them the ability to jump into a model providing a 360-degree view of the car as it’s being designed.
This removes the need to model cars in 2D and enables Ford’s design team to create prototypes at human scale helping them better understand the impact of changes on the driver experience. This kind of digital change could be measured in the following ways:
- Impact on employees’ ability to solve problems
- Recruitment and retention KPIs (as people want to work with cutting-edge tech)
- Change in training budgets
- End-to-end design time
- Impact on production time and costs
How you decide to measure the success of your business’ digital transformation will depend on the kind of changes you’ve made. By evaluating success using metrics that consider technical adoption rates as well as wider business objectives, you’ll create a powerful scorecard that assesses the impact of your digital programmes in the round. With solid data to hand, you’ll be well positioned to identify where improvements are needed so you can define, adapt and scale.
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