7 Digital Transformation Metrics & KPIs for Measuring Digital Transformation Success

“Digital transformation is the organized effort of integrating technologies into the processes of one company in order to automate repetitive actions and optimize working processes. It helps also collect and analyze data on the base of which to prepare forecasts and answer in the best way of customers’ expectations and inquiries.”

What is Digital Transformation?

The above-mentioned will probably be the explanation if we ask chatGTP, “What is digital transformation?” But how does this translate to human reality, and is it possible to use easy, measurable metrics to track progress?

In this blog post, we offer a few key performance indicators (KPIs) to e measure success.

Digital Transformation KPIs to Measure Success

Digital transformation is a complex process, and as such — it is difficult to understand if its adoption is successful or not. Thus, companies need pre-determined metrics (KPIs) to measure whether or not the implemented changes generate higher value and revenue, lower production costs, and make the processes smoother to ease the work.

Return on Digital Investments

One of the first and maybe most obvious KPIs to measure digital transformation success is the return on digital investment. Do digital investments influence revenue and growth in a positive way, and how long will the period be to compensate for the investment in digital initiatives? This might look like a simple math problem, but it actually has many different Xs, Ys, and Zs that should be specifically defined.

Still, digital strategy usually forecasts those indicators, and according to digital transformation, progress can give some time estimation for RoI.

Employee Productivity

Digital transformation efforts and newly implemented technologies could either ease the processes and empower employee productivity or bring confusion and demotivation. New digital tools and software adoption can actually lower production time and let employees perform more tasks at the same time.

This makes employee productivity one of the most relevant key performance indicators. It is linked to operational efficiency and employee engagement and helps in transforming the culture. But improvement for this KPI is possible only when the digital journey is very clear and employees have fully adopted new technologies. Thus, its measurement should take into consideration the goal behind this KPI, as well as pencil some time for adoption.

Digital Adoption

An important indicator of digital transformation is actually the adoption of technology-supported changes. How well are employees oriented to the new technology paths, and are they using them according to plan?

Adoption metrics give you an idea of how well your team is adjusting to the new platform or particular features. At the same time, poor adoption could mean the technology or user experience is too complex and not aligned enough with the process of work.

Percentage of AI-Enabled Business

Artificial Intelligence and data-driven processes are surely the new daily reality and drastically affect digital transformation implementation. Thanks to AI and digital processes implemented, the management can, in real-time, follow the important indicator of active usage. It can show you daily active users or group them into weekly or monthly active users.

Through digitally adopted technologies, they can easily measure their conversion rate and track users who start and complete a certain activity or action. Moreover, abandon rates are visible, and they can indicate certain issues in the customer journey that need remedying. Conversely, high conversion rates may be a sign your digital transformation journey is progressing well.

Customer Experience

Customer engagement via digital marketing channels is one of the active usage metrics to track and could really quickly answer the question of measuring success. Right usage of them can empower customer satisfaction and business performance and, at the same time, show a reliable digital presence.

Customer experience is surely a relevant digital transformation key performance indicator and should be included in every digital transformation plan. Through digital tools, the behavior of the different customers can be followed and much better understood. This could give a better overview and provide more insights not only into customer satisfaction but into the whole customer experience — whether it is good or bad.

Cost-Benefit Analysis

A cost-benefit analysis is a milestone for making a decision to shape the areas that are worth the investment and digital transformation. With a cost-benefit analysis, you can compare the costs and rewards of different situations to determine which is most likely to pay off in the long run for your business. Factoring in customer value, workforce productivity, and the implementation of new technology into business processes, these are the key metrics that are aligned with revenue growth.

Technology and Innovation Metrics

Digital assets and new technology implementation are of utmost importance in order to introduce innovation and digital services and achieve, in general, the digital maturity of the company. Training the personnel, raising employee engagement, and the company’s net promoter score are measurable digital transformation KPIs that generate revenue growth and help with the long-term goals of the company.

ROI of Successful Digital Transformation

Digital transformation ROI is calculated by comparing the cost of implementing new technology with the benefits that it has brought to the company and the revenue generated. Such key metrics are formulated when digital transformation goals are set, and the intended value is tried to be predicted.

Yes, you can always try to measure the return you get on your digital transformation investment by calculating the net effect of cost savings, revenue gains, and other benefits versus the costs incurred to implement a digital solution. But still, there are invisible factors such as improved customer satisfaction or journey, time for adoption of digital skills and digital transformation process in general, and many more.

The goal of any digital transformation is to have a significant enough return on investment (ROI) in order to implement new technology.

How to Choose the Right KPIs for Your Digital Transformation Journey?

Digital transformation has become a necessity for businesses to stay competitive in today’s fast-paced digital environment. Digital transformation has numerous benefits, but it also requires a clear understanding of what success looks like and how it will be measured.

By selecting the right digital transformation KPIs, organizations can monitor their progress, identify areas for improvement, and plan future steps in digital transformation. But how to choose those serving your company? There are 4 essential factors to measure for your company that will help you choose the KPIs tailored to your business.

1. Simplicity:

Employees should understand KPIs to align their work and be able to perform well.

2. Business strategy and orientation:

Consider your current business needs, consumers’ satisfaction and interest, and long-term values and goals. The trends or the actions of competitors should not affect your choice of metrics.

3. Agility:

Being adaptable to the environment is an important indicator.

4. Relevancy:

Don’t use previous KPI results again or a one-fit-all templated model. It is more efficient to choose leading indicators and key metrics. They will affect future outcomes and will help you shape a direction.

In any case, KPIs have to follow a certain logic and can be divided into several groups, depending on the area of monitoring. They can be related to customers and their retention, employees and human resources, business processes, innovations, or profitability.

In any case, the digital transformation strategy made for your company has to indicate digital transformation metrics tailored to your company’s digital projects and long-term goals.

How Can Resolute Help?

The digital transformation journey can be a bumpy process with too many unknown indicators or complicated choices that lead in different directions. Resolute Software has years of experience and can be your trusted partner in the process, with a huge portfolio of success stories all over the globe.

Are you ready to start your new digital journey? Get in touch to learn more about how Resolute Software can contribute to your organization’s digital transformation efforts.

FAQs

What are the KPIs for digital transformation?

KPIs for digital transformation are quantifiable goals tied to your core business objectives and are part of a sound strategy. They are metrics used to improve specific business outcomes and make transformation metrics more realistic. The quality of your KPI shows how effective your business is and helps at tracking progress toward goals.

How do you measure the success of digital transformation?

The digital transformation journey is an ongoing process, but KPIs are momentum indicators of its speed and implementation in comparison with the goal indicated. Right digital transformation KPIs are aligned with business models but bring digital solutions to raise the revenue generated and employee satisfaction and bring more active users compared to the pre-digital status of the business.

What are the 5 key performance indicators?

The 5 key performance indicators start with successful adoption or active usage metrics. Afterwards comes user engagement and participation level, followed and actually linked with employee productivity and successful attempts to simplify processes. Then high digital adoption rate and conversion metrics to end with the most obvious — revenue growth & ROI.

Why do you need KPIs for digital transformation?

KPIs are the metrics that can give some orientation if the digital technologies adopted are making the business processes smoother and lowering the manual work and mistakes possible. Transformation initiatives are supposed to help the business grow and cut operating expenses but keep employee satisfaction high.

How can IT infrastructure affect digital KPIs?

Digital transformation intends to boost companies’ performance, and IT technologies should offer smoother technical processes serving the successful adoption of digital transformation strategy. While some digital transformation KPIs could have been measured without the IT technologies — a high percentage of the above KPIs will also be a reflection of the IT infrastructure.

Originally published at https://www.resolutesoftware.com on October 26, 2023.