As digital business transformation becomes increasingly vital, management is willing to embark on initiatives that are expensive and both time and resource-intensive. But are these initiatives successful? How can progress and results be assessed? Many organizations invest heavily in digital technologies but are unable to determine if the investment has generated value or if they are headed in the right direction.

Digital transformation can go beyond technology and envelop the entire business. Successful digital initiatives require a strategic approach, strong leadership, employee engagement, and a focus on meeting customer needs. According to Harvard Business Review, although 89% of large companies globally have a digital and AI transformation underway, only 31% have captured the expected revenue lift and 25% have seen expected cost savings from the effort.

As digital projects become more complex and resource-intensive, it becomes necessary for organizations to quantify their impact effectively. A clear framework can help align initiatives with strategic goals, optimize resource allocation, manage risks, and make informed decisions. This in turn can foster a culture of continuous improvement and innovation. It can further ensure that digital projects not only deliver immediate benefits but also contribute to long-term organizational growth. This enables the management team to prioritize scalable initiatives capable of substantially improving the organization’s performance with fast, minimally viable outcomes that can be improved over time.

 

A measurement framework is key to digital transformation success

Unfortunately, this is an oversight that undermines many transformations before they even begin. It becomes easier to course-correct with a framework to identify weak points and monitor progress. A digital initiative is different for every organization and there are no universal metrics that can make it easy.

Figure 1: Building a framework for measuring impact of digital transformation projects

So, where do we start to identify the right metrics and KPIs? Organizations must focus on what they want to achieve with the transformation efforts and assess their digital maturity level to identify the right set of KPIs. Once the KPIs are identified, one must have the tracking and monitoring systems in place along with a robust reporting mechanism to enable analysis and decision making.

 

Focus on the right metrics to guide your initiative to success

Before introducing any KPIs, it would make sense to set the context by answering some preliminary questions. For instance, what are the key drivers for the digital project? Do we have the right systems to collect and analyse data necessary for the said KPIs? Organizations should understand their digital maturity levels and drivers for the project before establishing the right set of KPIs.

Figure 2: Measuring Digital Business Transformation

Organizations can have different objectives for their transformation initiatives, and they should begin by aligning KPIs with organizational goals, ensuring they reflect desired business outcomes. They can start by involving key stakeholders to identify relevant metrics that impact various departments. Every stakeholder may look at different metrics depending on their roles, and it is thus important to keep them informed, take feedback and incrementally course correct if necessary.

As the business objectives evolve, regular review and adjustment of KPIs can enable continuous improvement and successful digital transformation. When discussing the importance of measuring the success of any transformation project, we can draw on our experiences from previous projects at Opticos.

Every organization tracking its digital transformation progress will naturally employ various measurement tools. Given that the selection of these tools impacts the efficiency of measurement efforts, as well as the workloads and workflows of their users, selecting the right tools can significantly enhance the overall effectiveness of the transformation program.

Opticos provides expert knowledge and helps organizations to develop successful frameworks, analyse current reporting mechanisms, establish robust KPIs and identify the right tools for measurement. Contact us to know more.

Authors

Abhishek Kale, Matilda Johansson