By Divy Shrivastava, Co-Founder & CEO, Nineleaps Technology Solutions
Digital Transformation has become a staple term across industries. Everywhere we look, one organization or the other is swapping out their legacy systems and processes in favor of the digital ones. A survey by Mckinsey indicates that in response to Covid-19, organizations have taken a quantum leap in digital adoption at both industry and organizational levels. The results of the survey further suggest that there is an average of seven-year increase in the rate at which organizations are digitally adapting themselves to the pandemic.
However, with digital adoption moving at an accelerated phase, a question pertaining to the success of said adoption in the long haul lingers impatiently. According to Forbes, a staggering 70% of all digital transformation projects fail. There is reason enough to believe that this failure can mainly be attributed to a few important aspects that need to be considered. An organization’s readiness to change plays a key factor in determining the success of a digital transformation project. However, even if the organization is ready, proper measurement of the process through new-age metrics is another imperative that goes unconsidered.
According to reports by Gartner, 50% of CEOs have no metric for digital business transformation. By giving it very little forethought, such leaders are pretty much dooming their transformation initiatives from the start.
Metrics play the role of being signposts to a transformation process’ success. However, tracking Digital Transformation projects with traditional metrics like being on-time, or on-budget might not yield the expected results. With the evolution of the digital space, there is a need to upgrade to new-age metrics to track and refine the process.
The following metrics can help leaders track their digital transformation projects across industries such as retail, mobility, healthcare, energy, etc.
Analysis of breadth and limitations of a new technology’s usability: With the current digital boom, there are a number of new technologies and frameworks that have risen and claim to drive digital transformation. Industry leaders using these technologies early on in their digital products must be aware of the technology’s limitations and keep measuring the stability it has to offer. The limitations are usually measured by the adoption rate of the technology internally amongst employees and externally among industry leaders. Understanding the limitations helps to find alternatives from existing frameworks and helps leaders identify and correct redundancies at a very early stage.
Calculating the Rate of Investment (ROI): One of the key metrics to garner the success of the project is understanding how fast the project will deliver a return on investment (ROI). Leaders need to begin calculating the initial costs and understand ways in which the project will be able to recoup the investment. Based on the result and confidence index, they can either continue with the project or completely write it off.
Calculating the Adoption Percentage: When it comes to leaders adopting digital products that drive digital transformation, there arises the necessity to measure whether the implementation is successful or not. One of the effective ways to do this is to by comparing the number of licenses you have purchased with the number of users i.e., employees using the product. If there is an adoption percentage of over 85%, then it is safe to say that the product has been successfully adopted.
Analyzing the Ripple Effect: Another important measure in determining the success of a digital transformation project is understanding and adapting to its impact on the other dependent facets or elements of the business. The ripple effect will not always be the same. In other words, a change in the value proposition of the digital project does not always result in a set list of changes to other elements. It also depends on how aggressive the change is, and what element is changing.
Measuring Value generated through percentage of revenue attributed to digital products: Another key measure one needs to assess after adopting a digital product is to measure the revenue that is attributed to the digital product. This can be done by finding out how much of an influence your digital products have on the revenue. If there’s a 90% adoption rate of the product and the revenue derived from a particular channel has either increased or has a higher dependency rate to a particular channel, then it can be said that the digital product is creating value.
Measuring Value generated through percentage of productivity attributed to digital products: One of the main purposes of going through a digital transformation process is to scale in terms of productivity. Leaders need to check whether their digital products are performing or not to understand whether the transformation process is successful.
Measuring Satisfaction: Apart from external factors the digital transformation projects contribute to, it is also vital to check its internal adoption and further this by measuring the satisfaction of the employees using the software. Understanding the project’s ability to support employees to thrive in their roles can be equally important for success.
Adopting a structured approach by developing a goal-oriented strategy and calculating the success of digital projects while offering support to the team will guarantee a smooth transition through any business transformation ,as we continue to see an evolving B2B landscape.