Digital Transformation Success Factors: Measuring KPIs
Digital transformation is the process of changing a business or organization with technology and culture to improve or replace the existing processes.
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Digital Transformation Success Factors
The pandemic has catapulted businesses and organizations into the next stage of digital transformation. Businesses of all sizes are understanding the need to accelerate and bring about their digital transformation strategies.
Data continues to be at the forefront of any business and it is a driving force behind digital transformation. Efficiency, effectiveness, and customization are made possible by establishing a comprehensive view of customers or clients and their behaviors. Data has become integral for businesses that want to gain a competitive edge and engage their clients or customers more effectively.
To truly become a data-driven business that operates in real-time, business leaders must deploy multiple initiatives, including application modernization, artificial intelligence, cloud computing, and data analytics. Businesses also need to utilize the right platforms that can support the new demands of digital transformation, allowing them to turn mission-critical data insights into action and adapt to the new realities of today’s work environment.
What Is Digital Transformation?
Digital transformation is the process of changing a business or organization with technology and culture to improve or replace the existing processes. Digital transformation can come in many forms, as it can be the rollout of digitization in one department or it can be a large-scale transformation.
Some businesses and organizations are at the early stages of digital transformation and others are more advanced. Sometimes digital transformation involves a suite of applications or an add-on to an older system. Any area of a business can be digitalized, which is why creating KPIs (Key Performance Indicators) to measure success is such a challenge.
Why Is It So Challenging to Create and Measure Digital Transformation KPIs?
A KPI (Key Performance Indicator) is a measurable value that can be used to gauge the performance of a process, activity, or system. Digital transformation KPIs are used to measure how well digital transformation initiatives are meeting their business objectives. Digital transformation KPIs must be simplified and operational, and the KPIs should focus on driving internal efficiencies through digital initiatives.
However, finding metrics to measure digital transformation can be a real challenge. Digital transformation will be different for every business, and KPIs are unique to your business and industry and cannot be adopted universally. Digital transformation is also a massive cultural change, so there is often hesitancy. Some departments within a business are under the impression that KPI metrics are designed to make them look inefficient.
Accelerate, Innovate, and Transform with the Right KPIs
The reason businesses undergo digital transformation is to improve processes, activities, or systems that were previously inefficient. This is linked to core business objectives. Therefore, it’s important for businesses to be clear from the beginning that they are trying to make improvements on something that was substandard.
Therefore, businesses must ask a few key questions:
Where do we currently stand in our digital transformation journey?
What do we hope to achieve during our digital transformation journey?
What is our destination on the digital transformation journey?
How are we going to get to our destination?
What is the end goal if we reach our destination?
Business leaders who want to build or expand their digital business should set specific goals, work with members of the executive board to determine how digitization could benefit all areas of the business, and use data to make smarter decisions.
Business leaders must measure the progress and potential value of their digital business models, but before getting into digital transformation KPIs, let’s take a look at what business leaders should know before starting a digital transformation journey:
Establish Unique Metrics and Goals
Before beginning your digital transformation journey, establish metrics and goals for the outcomes you hope to achieve through digital transformation. Your metrics and goals should be established at the early stage because they will be used to define the path ahead. If there is no clear goal, your digital transformation may fail.
Place Your Departments in the Best Position to Succeed
To get the most out of a digital transformation, you must ensure that every department has an opportunity for a great outcome. Get input from your department leaders and determine what areas could benefit the most from the digital transformation.
Use Your Metrics and Goals to Make Smarter Decisions
Use your metrics to make more informed business decisions. If you remember what you tried in the past that did not work, you will be in a better position to determine the metrics that could work this time.
Use KPIs That Will Measure the Big Picture
Your KPIs should track the progress of the digital transformation efforts that are related to the existing business model. The KPIs should track all of your business functions, including operations, customer service, and marketing. Do you know how digital your business currently is? Your KPIs should answer that question.
By knowing how digital you are, you should be able to determine what benefits will come out of digitization. Using KPIs to predict the benefits of your digital transformation allows you to find the right balance between becoming too digital and not changing anything within the existing model. You must find the balance between what is right for your business’s unique needs.
The right KPIs will provide a vast amount of information, so it’s necessary to determine the most important pieces when presenting your findings to executives. You don’t want to give them too much information at once because it can become confusing and overwhelming, but you do want to provide them with the right information. The KPIs you share must allow everyone to see the big picture, and they do not have to replace certain existing metrics, but they should enhance them.
Choosing an area of your business that needs to undergo a digital transformation.
Determine the benefits of digital transformation.
Identify a metric that can be used to assess the degree of digital transformation.
Find a single metric that will enable you to identify your balance point.
Do You Know What KPIs You Are Measuring?
More businesses are undergoing their own unique digital transformation journeys. Now, it is time your business went on a digital transformation journey and put your fingerprints on it. Eliminate the fluff, and determine if you are measuring the following:
Customer satisfaction and experience
Return on investment
Improving customer experience is one of the core objectives of nearly all digital transformation journeys. Therefore, you must remain aware of the customer experience you are delivering if you are aiming for continuous success. Measuring customer satisfaction and experience can be broken down into the following KPIs:
Creating more streamlined customer journeys
Customer acquisition rates
When making any KPI plan before undergoing digital transformation, we recommend that businesses follow these guidelines:
Set a goal for every individual KPI
Measure the progress of each KPI
Use KPIs to influence business decisions
Digital transformation is not as easy as many would like it to be. While digitizing your business provides a variety of benefits, it’s important to track your progress and the outcomes as the transformation occurs. KPIs provide business leaders with the insight they need to make smart decisions, gather information, share information, and generate revenue.
For businesses looking to jumpstart their digital transformation journey, the above factors provide a blueprint for business leaders to come together, establish a vision, and follow the right path that will allow their business to thrive in the new digital reality. However, you don’t have to look at everyone else and where they are on their digital transformation journey. You might conduct some research to know what is out there, but your digital transformation is going to be unique.
You should not use the copy and paste method when it comes to creating your digital transformation strategy because you have unique business needs that you must address with your own strategy. Your business has its own digital journey and it needs its own strategy. That’s why establishing KPIs that align with your unique business goals is important. By establishing your own KPIs, your business can significantly improve and optimize key processes along its digital transformation journey, and maximize your gains exponentially.
The baseline for your business is to build an environment wherein employees have a connected system for them to do the work. It is important for businesses to know how they can improve their response to change or any future crisis. Digital transformation must be focused on problems that require the most attention within your business. These priorities will help you understand what systems, processes, and activities are needed.
Making your way through the complex journey of digital transformation requires certain mindsets and behaviors from business leaders that are different from those required in the past. However, digital transformation is an exciting journey. Through your digital transformation journey, you will learn about the performance of your initiatives and the performance of your business. The goal of a transformation journey is to position you in a better position to succeed in the future.
If you are improving your value at the end of your journey, then everything will be worth it. Change starts with you. Are you ready? Contact Baroan Technologies today to find out how we help businesses execute technology-driven transformations.
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