2022 Guide To Digital Transformation KPIs

A Guide To Digital Transformation KPIs

More and more businesses are adopting technology to improve efficiency and lower operational costs. However, many businesses do not understand the entire digital transformation process or measure the results of their decisions. As such, the result is rarely ever in line with business leaders, end-users, and developers’ expectations. Therefore, before making any investment decision, small business owners must ask themselves what digital transformation means for their businesses and how technology can help them get there effectively and efficiently.

What Is Digital Transformation?

For digital transformation to make a lasting impact, three elements should fall into place: People, Process, and Technology.

Before making any technology decision, business owners must understand the challenges people face, the existing processes, and where there is room for improvement. Once you identify these three components, you can choose the right technology for your business.

Digital transformation works when the chosen technology solves relevant problems.

How To Launch Digital Transformation For Your Business

First, open up communication with stakeholders from the senior management, IT department, and, if possible, a customer. Each stakeholder will help you understand the goals and expected results on different sides, including the enterprise and the customer.

Over the series of meetings, document the processes and identify opportunities for improvement. Find out the constraints affecting your team and customers, and ask your tech department to suggest suitable ways to improve digital processes and products.

At the end of this process, you’ll have a vision statement to align your team, establish a project, create a plan, and select the right strategies for execution.

What Is Digital Transformation ROI?

How do you calculate your return on investment (ROI)? Your ROI is a financial indicator that quantifies the success of your project relative to your investment. Every good digital transformation strategy should yield a positive ROI. If there is no ROI, then the plan is not working.

However, you can only discuss your ROI after beginning the digital transformation process. You can then use the results to review how much time and resources your team has spent in line with your company goals.

You can measure your digital transformation ROI by comparing the cost of implementing new technology and its benefits to your business.

In general, ROI = (Profit- Investment)  Investment.

The ROI may include :

• Reduction in operation costs
• Increased employee productivity
• Increased leads and sales
• Improved customer satisfaction
• Increase in employee engagement

However, to measure your ROI, you need to set suitable units of measurement.

What Are The Most Important Metrics for Measuring Digital Transformation?

The most important metrics for measuring digital transformation are:

• User experience for development
• Productivity for measuring operations.

You might ask, what makes these metrics so useful?

User experience allows you to track how well users are navigating new processes and how well they are performing and living up to their expectations.

Tracking your user experience closely and asking for detailed feedback are the best ways to tell how well your users are adapting and how you can make adjustments to make digital transformation effective and efficient.

For example, when developing new software, you should establish a feedback loop with your end-user and senior management to make sure you create a product that solves the business’s software problems. This way, when you finally launch the final product, your users are already familiar with your system and processes.

Productivity is the best measure for operations and efficiency. The overall goal of digital transformation is to do more with less. So if productivity increases for a specific investment, the strategy is working. In addition, the technology should improve overall user experience and employee and customer satisfaction.

Why You Need Digital Transformation KPIs

Business transformation requires a movement in your business from one point to another, preferably to a higher and more advantageous level. However, it’s difficult to gather resources and use them to acquire ambiguous transformation. Therefore, setting realistic and measurable goals is important for sustainable digital transformation.

Key Performance Indicators (KPIs) are measurements used to gauge a business’s performance. With the right KPIs, you can measure progress towards your goals, compare tactics based on measurable performance, and make business decisions based on real data.

What Are The Characteristics of Good KPIs for Digital Transformation?

KPIs help you improve your strategy and operational improvement. They create an analytical basis for decision-making and help you focus your attention in the right places.

To manage KPIs, you need to set your targets (the desired level of performance) and then track the progress against that target. Over time, you’ll notice that you need to manage your KPIs.

Managing KPIs means continually improving lead indicators and changing weighting. The lead indicators are the precursors of future success. Lagging indicators, on the other hand, show how successful your business was at achieving a result but in the past. Over time, you can compound this information to inform your digital transformation strategy.

However, overall, a good KPI for digital transformation should:

• Provide unbiased evidence of progress towards the desired target
• Measure what it is intended to measure
• Offer a unit for comparison and show the degree of performance of a decision over time
• Offer a reliable unit for business tracking, analytics, and reporting

How To Choose KPIs For Digital Transformation

The specific KPIs you select to measure user experience, and productivity may vary depending on your unique needs. For example, if your business focuses on faster automation, you can measure productivity by comparing the time spent on the task with automation and without it.

If you want to improve productivity in your remote workforce through collaboration, you can discover how many employees are using your video conferencing to collaborate remotely. Your next step may be to compare the number of employees using live video calls versus live chats to communicate every day.

The bottom line is that KPIs are important because, to improve, one must measure.

You can measure the following to improve your success:

• Scope of transformation
• Active use
• User engagement and reliability
• Risk factors
• Customer experience

KPIs influence decisions such as:

• Cost allocation
• Compliance and license purchases
• The number of productivity hours needed to implement changes
• The number of people involved in a process

With KPIs, you can identify how your software performs a task and compare the process to your current processes. You can also compare your findings with cost savings or revenue coming in from the digital transformation.

Notably, the most significant impact of digital transformation is seen in the process of automation. This is because automation directly impacts how efficiently you can run your business by implementing digital changes.

The Process of Selecting KPIs for Measuring Digital Transformation

Your digital transformation should be sufficiently impactful to encourage regular engagement. If your users aren’t engaged the way you planned, you might need more changes. Suppose you need to measure user engagement to determine how your current digital investment is paying off.

More specifically, let’s say you launched an employee application and need to determine the user engagement. However, since the mobile app might be compulsory for all employees, KPIs such as retention rate, number of new users, and stickiness may not offer any relevant measurements for progress.

• However, you can measure the average session length to determine how much time the average employee spends on the application. You can find the average by dividing the total amount spent on the app by the number of active users.
• You can also measure the cost per acquisition (CPA) to measure how much you have spent per user. You can then compare the CPA with the cost saved per user or how much revenue you have generated per employee.
• On the other hand, if you were measuring the effectiveness of your firm’s blog, a measure such as the number of new users shows you how many new people are interacting with your blog every day.

After launching an internal company application, you may also need to measure what people are doing with your app and how they feel about your product. For this, you need to choose a specific behavioral or attitudinal metric to measure.

For example, if you want to measure user behavior at the task level by measuring the abandonment rate on a specific feature on your website. Let’s say users open their employee profiles and abandon the process halfway. You can find your abandonment rate by dividing the number of abandoned profiles and the number of initiated processes.

If the rate increases despite measures deploying your previous tactics to encourage employees to complete their profiles, you can adjust.

You can also address your end-user struggles by checking how they use your help center and customer service. For example, you can determine the most challenging sections by measuring the frequency of a specific query over a given period. In addition, you can use page views for instruction pages in your help center to find out where your end users are asking for support.

Are You Struggling to Track Your Digital Transformation?

Palindrome Consulting helps you transform the people and processes in your firm or small business with technology. Schedule a free consultation to discuss how to measure your digital transformation in South Florida.