Digital Transformation: Measuring What Matters
via DevOps.com by George V. Hulme
As enterprises strive to digitize their organizations, whether it’s digitally transforming aspects of sales and marketing, customer interactions or supply chain, they’re undergoing a wholesale revamp of traditional businesses into digital business models. While some companies are just getting started, as we covered earlier this month in Digital Transformation: Coming from Behind, the bulk of those enterprises that have already embarked on digital transformation efforts—70% according to some findings—fail to meet their objectives.
How do enterprises flip such statistics around? We reached out to a group of experts to find out, and collected their thoughts on how organizations can attain better digital transformation results through better quantification of their efforts.
It sounds simple enough, as Cyril Attia, CEO at BeMyApp puts it: Success should be measured in alignment with the key performance indicators (KPIs) of the business. He said, when advising his customers, he makes certain “one of the main focuses is to identify if these efforts are directly related to bringing in or maintaining clients which ultimately have an impact on the bottom line.”
Stay Focused on Core Business Objectives
Not staying focused on core business goals is at the essence of the challenge. “One of the reasons that digital business transformation is so ambiguous, and in an overall sorry state, is that the objectives are not clear,” said AgilePoint CEO Jesse Shiah. Organizations should make themselves clear about their desired outcomes and what it is they specifically seek to improve, he said, adding this is best achieved by tying digital transformation initiatives to key performance indicators that can best determine the health of the business.
“Through your efforts, are you making progress against those goals, do you need to adjust course? Once you’ve found a successful formula, think about how that success can be replicated in other areas of the business,” he said.
Kyle Hutchins, a senior director at business and technology consulting firm West Monroe Partners, agreed. The key to initial success is identifying the right KPIs, starting small, and proving out the viability of the idea, he said.
“Success metrics should be tied to your overall business strategy and not live as a standalone set of KPIs. Once you have a short list identified, ensure you are tracking the progress and able to measure the impact,” Hutchens noted. “When you have a win, share the success broadly within the organization, tie (it) back to your digital vision and use that as an entry point into other areas of the business.”
Shift to Value-Based Measures
Dave West, CEO and product owner at Scrum.org contended that, when it comes to measuring digital transformation success, traditional motion metrics such as velocity, as well as efficiency on time and budget measurements, should be replaced with external value-based measures that will establish the baseline that the effectiveness of change will be measured against. “For each value stream or customer aligned team, the measures will be unique. For instance, value for one customer might be a net promoter score; for another, it might be direct revenue. However you measure value, there are three types of things that should be considered: current value, time to value and innovation,” he said.
West defines current value as to how one directly measures the current value of your product and can include measures such as numbers of users, revenue, profitability and brand. While time to value ratios, how long it takes to deliver from an idea to its implementation? When it comes to measuring innovation, West says, innovation should be measured as the percentage of new stuff versus fixes/infrastructure being changed when a release is made.
Attia added that such effective KPIs will indicate if outputs are being achieved faster or cheaper, ultimately decreasing overall costs and improving profits.
Hutchins said there isn’t a single list of magical KPIs, and points to a set of questions (suggested by Gartner firm) designed to help create digital KPIs:
- What is being measured?
- Where are we today?
- What is our target goal?
- What is the desired business outcome or benefit?
- What is our balance point?
Craig Besnoy, program director and digital strategy consultant at Mindtree, has a straightforward way he suggests companies look to track their success. That’s by the internal popularity of the program. “Companies should track their success based on the number (of) departments in the organization that are requesting access to the digital transformation program,” he said. “Once the organization experiences the increased efficiencies and revenue that digital transformation can bring, managing the requests will be the biggest challenge.”
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