How to Measure Digital Transformation Success

Rob Warburton
October 17, 2022 4 min read
how to measure digital transformation success

As the number of digital transformation projects grows, demonstrating a compelling return on investment is critical for digital transformation teams to gain support and obtain funding. Many companies are looking for ways to measure ROI and improve it over time.

What is Digital Transformation?

Digital transformation is defined as the innovative application of new or existing technology that improves or creates a process, product or experience that ultimately creates new business value. Digital transformation initiatives typically have several goals, including increasing revenue, improving customer experience, reducing costs, and increasing employee productivity. In general, business organisations want to make a profit, while non-profit organisations want to operate more efficiently. Using new digital technologies requires a new paradigm. Newly founded companies start their business using digital technologies and thus are more competitive in the market at the very beginning of their business.

Companies that do business face the process of transformation from the traditional business model to new models, which would make the companies more efficient, innovative and competitive in the market.

In the new age of digital transformation, we are moving away from the classic economy and business processes we are used to, where values were created and retained in a different way. With the help of digital transformation, we arrive at new business models, where the one who has, analyses and manages a greater amount of data and information creates and retains value, optimises his processes, reduces costs, implements innovations, promotes growth and development, facilitates communication at all levels.

Challenges of measuring digital transformation

Digital transformation requires big and bold decisions to establish a new business model, not just improve operations. Knowing how to face such decisions, set priorities and know how to implement them is often what makes the difference between a successful and a failed transformation. There is no universal formula for a successful digital transformation because, like people, all companies are different, have their own specifics and areas in which they can achieve a comparative advantage.

To the question, is it enough to have a profile on social networks and an e-mail contact on websites? The answer is - of course not, it is about a much greater integration of available technological solutions, but also a change in thinking about the company's operations and opportunities in all fields. Also, it is unrealistic to expect that by purchasing a lot of IT equipment and furnishing an office without a clear vision, you will succeed in digital transformation. Creating a strategy related to successful transformation is a challenge for all companies, as well as for countries, so it should not be taken lightly. A big obstacle is the fear of change, and this is most evident in the generation that did not grow up with technology, and it represents a big challenge for them.

How to measure digital transformation success?

It’s of value that digital and IT companies set up key metrics of success that align with the organisation goals. Here are some of the KPIs to keep an eye for:

1. Customer engagement

Perhaps the most known area of measurement that can be found in digital marketing, mostly because of the rise of social media as a channel for engaging with customers. These KPIs look to see different effects of different stages in customer's journey. Some indicators have become a crucial part of digital marketers’ tools, including organic traffic measurement, clicks, impressions, mentions, reposts etc.

2. Employee engagement

Increasingly more digital tools are used to improve employee engagement to the extent that they are being used for talent acquisition. These tools are used for training of new hires, special projects, everyday work etc. KPIs that assess if these digital tools are working could include reduction of errors. It's key to measure tool adoption and usage, like how many employees are actually using the tool, if they’re using all the features provided by the tool and how much time was saved and by which tool.

3. Amount of new revenue attributed to digital investments

Matching revenue to a specific marketing effort is vital. For example, you can track how many potential buyers interacted with a specific tool and how many of them became paying customers. These measurements can give you an insight how different digital tools support efforts for increasing business or improving operational efficiency.

How to set the right digital transformation agenda?

Every business should create a well-defined set of goals since the measurements will be focused on understanding the goals of the transformation program. This is much better than purchasing a new technology and deploying it just to stay modern.

One common aim that an organisation needs to pursue is digital maturity.

Digital maturity refers to an organisation's overall capabilities, such as responding and adapting to disruptive technological trends, as well as employee skill levels, the integration of the digital workspace and how much software is being used.

There are a number of different digital maturity phases, but it all comes down on a simple scale: at the bottom of it are the least mature organisations, with little to none digital capabilities. In such organisations, even if they have the right tools, thy are poorly used and employees lack the right capabilities to use the tools in mention. However, at the top of the scale are the most digitally mature organizations. They are vastly capable of using digital tools, integrated technology stacks, and they leverage all of their capabilities to better their organization’s strategic aims.

Another thing to keep an eye out for is customer experience improvement. Customer experience has become a competitive differentiator in the digital age. With more businesses making and selling the same product in the same price range, customer experience is mostly what differentiates those products of service. The specific tactics may vary. Some organisations tend to improve personalisation and back-end tools, while others may focus on improving product design or their marketing programs.

The bottom line

Taking a structured approach to digital transformation means developing a goal and result-oriented strategy, dealing with changes on an individual level, and just as importantly measuring the transformation. If you need help in measuring yours, the digital experts at GRM Digital are always happy to help.