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Defined Goals from the Beginning with Digital Transformation

Why do you think up to half of organizations don't measure their digital transformations? Because it can be challenging. And, let's be honest, deciding on key performance indicators (KPIs) for digital transformation isn't the most thrilling element of the process. It is, nonetheless, necessary for success. Because you have defined KPIs for digital transformation, you can perform early check-ins on your progress and make changes and course corrections to boost your chances of success.

Beyond traditional KPIs

Organizations who employ traditional KPIs to measure digital transformation will find that they are ineffective indicators of the process's success or challenges. One explanation for this is that digital transformation involves a sequence of changes, and traditional indicators of success, such as an increase in sales, aren't often there in the early phases.

Traditional KPIs are usually related to longer-term business outcomes or a specific department, resulting in a fragmented picture that isn't useful when monitoring digital transformation. Because digital transformation frequently affects the entire organization, its KPIs should be cross-functional and not isolated.

Map out digital transformation goals

When it comes to planning out digital transformation goals, the first step is to think strategically. From the start, your company must define and track the benefits. It's nearly impossible to quantify digital transformation afterward if you start with a broad goal of digital transformation and launch a slew of projects with no clear goals or impact measures.

The strategic goals you intend to attain should be viewed from a business-wide perspective rather than a department-by-department basis. Expect your organization to have different goals than others because every digital transformation is unique to each industry and company.

Your company's overarching business objectives and KPIs should be linked to your digital transformation goals. You want to figure out how any digital transformation projects affect the company's overall performance, but you also want to define quantifiable and measurable project milestones that will allow you to assess progress even before the company's KPIs are affected. Instead of collecting a bunch of vanity metrics that could fill up reports but don't really tell you anything relevant about the progress and impact of your digital transformation, the goal should be to monitor only what's important.

Good digital transformation metrics demonstrate a holistic perspective of the influence on the entire business and provide a constant view of what is working and what isn't. When developing KPIs, make sure all of your key stakeholders are included in the discussion.

According to a Gartner digital transformation analysis, you should answer the following five questions to build your organization's digital transformation KPIs:

  1. What is being measured, first and foremost? This could include information such as the number of licenses purchased as well as analytics on how digital tools are used.

  2. What is the starting point for the measurement? To keep track of your progress toward your objective, you need to know where you started.

  3. What is the intended outcome? This is the number that indicates you met the metric's success criteria.

  4. What business value do you want to achieve? Digital transformation metrics should be linked to a business goal or KPI.

  5. What is the point of equilibrium? When it comes to digital change, there is typically a law of diminishing returns. That means that, in some cases, setting a goal of 100 percent might not be a good idea (eg, moving 100 percent of customers to digital channels when not all of them have access to such channels).

Examples of digital transformation KPIs

The KPIs you choose will be determined by your organization's conditions, such as whether you're just getting started with digital systems, updating to new technology, or adding new methods to augment existing digital projects. According to Gartner, most boards of directors want to know the advantages, costs, and risks of implementing a digital transformation strategy, and whatever those factors are, they should be able to impact business decisions.

While you shouldn't copy the metrics of another company, here are some suggestions from Gartner on what to look for in the top KPIs.

  • When they show signs of poor performance, take action.

  • Act as a leading indicator

  • Have a causal relationship to a business outcome and

  • Be easy to understand for individuals who aren't tech-savvy.

Some organizations use the following measures to measure digital transformation:

Scale: Metrics like the number of processes conducted on software and the number of new users relative to the number of licenses purchased are critical for demonstrating how digital solutions are being used by your organization or customers.

Productivity: Most organizations are embracing digital transformation to save time and money. Productivity indicators can aid in determining the value of digital solutions to your company.

Usage: Metrics on how digital technologies are being used are an excellent method to see how they are transforming an organization. You may monitor the ratio of new users to recurrent users over time, as well as the drop in usage.

Engagement/retention: Metrics that evaluate user experience are crucial. Customer lifetime value (CLV), "customer friction" (the amount of work or time it takes to complete a task), and other metrics can help identify success or areas for improvement in the customer experience. You can see where troubles arise by looking at the user path.

Constant monitoring and evolution

It's critical that any organization adapts to ongoing change, from shifting client demands to market constraints and technological advancements. The companies that establish metrics explicitly from the start, monitor them, and adjust their digital strategy in reaction to the data are the ones who will succeed.

According to Forbes, approximately 70% of digital initiatives fail, making it critical to carefully manage your digital transformation. You will considerably boost your chances of success if you set up measurements for your digital transformation from the beginning and continue to evaluate and change your efforts based on the insights from your analytics.

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