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Measuring the success of Digital Transformation

Of all the organizations I've worked as Digital Transformation Consultant over the years, I've learnt that digital transformation is an on-going enduring journey. I've not heard from anyone that they are at the end of the Digital Transformation Journey. Because in a world where everything is changing so fast, the goals and priorities keep evolving. But, the challenge is : For an evolving process, How should an organization quantify the return on investment? How to measure success?

Most of the traditional business KPIs are predominantly financial in nature, relating to direct ROI impact of various activities on the business. However, when it comes to digital transformation, it may be difficult to quantify a direct impact on ROI of many significant activities. For example, social media outreach! We all know that social media can significantly boost brand awareness and preference, however, these gains may not show up in standard excel sheets measuring profitability.

So, how do we then create a new set of KPIs for digital transformation?

To begin with, what we need for this is a clear understanding of parameters on which your digital initiatives will yield results – which may include operational efficiency, delivering better customer experience, creating a new revenue stream, etc. Before beginning the process of transformation, it's important for all business stakeholders to determine what metrics are important and meaningful for them.

From my experience of working with global organizations on Digital Transformation, I've tried to put together a set of KPIs to share some perspective :

1) Clearing bottlenecks and bridging gaps between silos

The first success measure of Digital Transformation is how well the process has downsized the gaps between teams and departments and created platforms for seamless collaboration between business functions and global teams. This also includes increased workplace collaboration and knowledge sharing within the organization.

2) Technology driven by purpose

The second critical measure of Digital Transformation is establishment of technology platforms, marketing ecosystems, mobile, and social channels and communities that are coordinated and integrated to support consistent quality experience for the customers/prospects.

3) Reduced operational costs

Whether it's a process like " Audit of Online Marketing Campaigns" to reduce wastage and optimize budgets, or a significantly longer process like "Implementation of IOT" (Internet of things) to optimize supply chain across all warehouses; one of the primary and most important impact of digital transformation is reduced operational costs and wastage.

4) Heightened customer engagement

At the center of digital transformation efforts is the customer. Multi-channel Customer Engagement through technology is empowering consumers to communicate with enterprises in new ways, which fundamentally changes the dynamic between buyer and seller.

5) From Descriptive to Predictive and Prescriptive Methods

Every organization that is implementing transformation and is driven by data (for decision making), is evolving from traditional methods to Predictive and Prescriptive Methods, wherein, forecasting techniques - statistical models & simulation algorithms give intelligent recommendations to business stakeholders to achieve the desired outcomes and to increase ROI.

6) New Channels to Increase Top Line

Conquering the top-line challenge of converting digital into increased revenues, Organizations that have established a solid digital foundation are taking their strategies to the next level. When we talk transformation, the relevance of innovation is fundamental to competitive survival. Product diversification doesn't produce top-line growth. Cost-reductions don't generate top-line growth. Innovation is the essential element that produces top-line growth.

Parting Thoughts

The above list of KPIs is not all-encompassing. Each organization needs to identify it's own unique set of success factors. To conclude:

The big question: What will my business get out of digital transformation? Do the benefits outweigh the time and effort? The short answer: Absolutely. If companies get their digital transformation right then there are huge rewards on the table.


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