7 Key KPIs for Measuring Digital Transformation Success
Track your digital transformation success with essential KPIs. Explore curated lists and custom metrics to elevate your strategy and drive progress.
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Digital transformation can’t happen with unclear goals or an unclear definition of success.
Nor can it happen if you’re using unclear or outdated metrics to measure progress and calculate returns on DX investments. In other words, clarity is everything.
Companies need clearly-defined metrics to measure progress toward those goals and understand whether actions and investments are moving them in the right direction – or sending them down a destructive path.
In this article, we’ll explain how to identify the “right” KPIs for measuring DX success. We’ll also look at some common examples and when, how, and why you might use them to answer specific questions about your project.
Digital transformation KPIs, like digital transformation itself, are hard to define because they’re so specific to the individual organization and its initiatives.
But, there are some universal qualities “good” KPIs have in common:
According to research from MIT Sloan, companies tend to report poor results from DX efforts. Yet, those same companies consistently pick bad or misleading metrics such as how many processes users ran per session.
Much of the problem points back to the fact that companies often have a hard time breaking up with “ legacy KPI perspectives” that undervalue the role of KPIs by using them to track performance after the fact.
Again, every organization will track different metrics to determine whether their digital investments are delivering the returns they were hoping for. It’s also worth noting that because transformation is always evolving, your KPIs aren’t set in stone.
The metrics that make sense right now might not align with future goals — so, don’t get too attached.
That said, we’ve included seven more “evergreen” KPIs you should be tracking regardless of digital transformation goals.
Return on digital investments is one of the most common KPIs for tracking DX initiatives.
These projects are massively expensive and demand a huge amount of effort from everyone in your org. It only follows that business leaders want to make sure that it was all worth it.
The idea here is simple. You’ll want to look at the amount spent on tech, training, hiring, etc. related to your DX initiative, then compare that total to the amount of revenue that was generated in the time since making that transition.
Keep in mind, ROI can seem pretty minimal for the first few stages of your transformation. Initially, you’re trying to figure out whether you’re heading in the right direction. Long-term, you’ll be able to get a better sense of how successful this project was.
For many organizations, measuring how technology innovation impacts the bottom line is crucial.
As Capgemini VP of AI Engineering, Goutham Belliappa explains in this 2021 article, revenue from commodity services is no longer as important as revenue generated from innovative new capabilities.
Companies are moving away from cost-containment measures and toward DX investments that allow them to provide more value to customers and increase market share.
While this digital transformation KPI might sound almost identical to ROI, there’s a subtle yet important difference between the two.
ROI focuses on measuring whether DX investments enabled you to achieve a specific objective. That objective might be increasing revenue, but it could be something like streamlining employee onboarding or automating manual processes.
Here, your goal is connecting digital transformation efforts directly to the bottom line. For example, how do new business models translate to actual profit margins? Or, how have DX investments helped you improve customer acquisition, retention, or overall customer experience?
Digital adoption is another big one — you’ll want to be able to learn how — or whether — employees are engaging with new tech, platforms, or processes.
You can measure adoption rates in a few different ways:
These metrics can give you a sense of whether users are committed to new processes and tools.
They won’t tell you whether or not users are effectively leveraging these new tools. But, they can help you understand things such as whether your change management strategy is working or whether teams are adjusting to new habits or workflows.
If adoption seems low, it could mean that the new solutions are too complicated, a poor fit, or you haven’t provided adequate training. In that case, you’ll want to capture feedback from users and try to identify what went wrong.
If teams are adopting new solutions and actively using them, you’ll want to make sure they’re getting the right results. If they’re not, you’ll need to tweak the process and see if things improve.
Done right, digital transformation benefits employees in two key ways. First, automating mundane, low-value tasks allows them to spend more time on rewarding work, which in turn, benefits your customers and your company.
Second, eliminating silos makes it easier for employees to collaborate and access the information they need to do their work.
Tracking employee productivity allows you to determine whether investments in automations or collaboration platforms resulted in efficiency gains. You can measure employee productivity in a few different ways:
According to Salesforce, data governance is the “number one” KPI for measuring digital transformation success. As companies ramp up their DX investments, digital footprints get bigger and harder to manage.
Without strong, streamlined data governance processes in place, it becomes much harder to reach critical DX goals. Worse, it can create complex problems (our recent post on bad governance in the cloud shines a light on one such scenario).
You can measure data governance success by looking at changes in:
Measuring the percentage of your business using AI and machine learning can help you understand how mature your DX strategy is.
That said, this metric is only a starting point for learning more about business processes for further optimization.
Automating business processes doesn’t mean those processes are delivering the right results. Nor does it make sense to use AI in certain instances.
Your best bet here is to look at how many processes are currently enabled by AI and ML, then either focus on identifying manual processes that can or should be automated or measuring the efficacy of AI-enabled processes.
A recent PwC Pulse survey found that nearly a third of CFOs are analyzing how analyzing how climate change scenarios could impact financial performance. It only makes sense that sustainability goals are converging with digital transformation.
Organizations are increasingly leveraging AI, ML, and big data to reach emissions targets and supply chain goals.
For example, the IoT allows businesses to capture and analyze resource data and energy consumption across systems, job sites, and facilities. AI, on the other hand, can make real-time decisions to drive the best possible environmental outcome — using measurements, historical data, and external data sources.
Or, you might collaborate with a network of technology partners to achieve ambitious sustainability targets faster. In any case, business leaders might measure the impact of their DX investments against the following goals:
The reason digital transformation KPIs exist at all is because they help businesses achieve game-changing results through big digital initiatives and incremental improvements.
While this all might sound simple, it’s harder than you might think.
In some cases, cases, making KPIs are helping, not hurting your efforts might involve significant changes to your culture, org structure, and workflows.
Velosio’s Digital NEXT program offers a rock-solid foundation for driving transformative outcomes. Experts work closely with clients — helping them gather requirements, identify use cases, and define the right KPIs for measuring progress. They’ll then use that information to design and implement a phased DX roadmap for reaching short and long-term goals.
Contact us today to book a consultation — or talk to an expert about our DX services.