More and more companies are adopting digital transformation and leveraging technology to improve every aspect of their business. As a firm begins to implement and develop these tech solutions, managers will have to be able to show the results of these changes – corroborating any additional investment to key stakeholders and senior personnel.
The problem is, measuring the success of digital transformation within a business isn’t easy. And without a formalised process in place to monitor digitalisation, companies risk watching their transformation efforts fall by the wayside, with question marks over the long-term viability of new processes, innovations, and technologies.
So, how exactly do you measure digital transformation within a business? And what techniques can be used to demonstrate the value of technological investment to key stakeholders?
In this guide, we’ll show you how to measure digital transformation, with advice on the metrics and strategies to use and tips on what and not to focus on.
- Why Measure Digital Transformation as a Business?
- How to Choose KPIs When Measuring Digital Transformation
- Five Metrics to Use for Measuring Digital Transformation
Digital technologies have become so ubiquitous, it’s easy to neglect to measure ongoing investment and upgrades. But failing to keep track of digitalisation within an organisation not only makes it harder to justify future investment, but also jeopardises progress and growth in other areas of the operation.
Measuring digital adoption may not sound like a priority point for your business. But in formalising the tracking of digitalisation within your organisation, this allows for a consistent approach to transformation across the business – ensuring that all functions are serviced with the appropriate solutions, innovations, and enhancements.
Elsewhere, measuring digital transformation can provide insights into how rapidly the business is growing, and in which areas. This allows you to funnel additional resources and funding to the right areas of the company, encouraging growth and performance enhancements at the opportune moment.
Measuring digital transformation requires a holistic approach to business analysis and auditing. You’ll need to evaluate a range of factors to attain a clear picture of how rapidly the business is moving towards digitalisation, so choosing the appropriate KPIs is essential to driving technology adoption in the right areas.
Here, we look at some key points to consider when choosing the KPIs that will steer your digital transformation measuring strategy.
- Competition and external market conditions – what are your competitors focusing on? And what technological trends have started to emerge within your industry? Market conditions and competitor activity is one of the key drivers of digital adoption, and will likely set the pace for how rapidly your business adopts new tech.
- Internal goals and objectives – what are your short and long-term goals? And what digital technologies will you need to invest in to help get you there? Discuss business objectives with individual departments, attaining a picture of what each function needs to boost its performance and efficiency.
- The technology being adopted – certain digital technologies require different methods of measuring and auditing than others. Prioritising adoptions that have proved particularly costly or offer the greatest prospective benefits is important, particularly if you need to justify investment in expensive new tech to senior stakeholders or the board.
- The software or platform you’ll use for measuring digitalisation – effective measurement of digitalisation relies on the right software. The platform you choose will affect the insights and data you can glean from your measurement efforts, so think carefully about what you hope to gain from long-term digital adoption and select the right measurement tool to help get you there.
While it’s important to choose the metrics that best align with your business objectives and requirements, the following five KPIs offer an excellent foundational framework on which to base your transformation measurement strategy – perfect for SMEs looking to attain a general overview of how their digital adoption is progressing.
Metric 1: Usability
When onboarding any new technology, it’s important to consider how effectively it’s being used across the organisation. This not only gives you a sense of the long-term ROI you can expect from a particular technological investment, but also how effectively it’s being used by staff as part of day-to-day operations.
Measuring usability can be tricky, but there is a range of tools that can deliver insights into the usability and functionality of recently onboarded tech. Digital adoption platforms let you monitor the features and functions that are being underused, as well as any workflows or processes that are causing bottlenecks, so you can maintain efficiency and put things right.
Metric 2: Licences vs Number of Users
No business wants to overinvest in day-to-day technologies, so one of the simplest ways to ensure software and platforms are being utilised to their fullest is by measuring the number of regular users relative to the number of licences purchased.
Software licences are an expensive overhead that can eat into monthly budgets and resources. By measuring the uptake of your licence usage, this not only provides a clear picture of technology adoption rates, but also highlights potential areas for cost-cutting, with the potential to save significant sums which can be reinvested into other digital technologies elsewhere in the business.
Metric 3: Productivity
One area every business hopes to optimise through technological investment is productivity. Adopting the right solutions can bring a significant boost to productivity, output, and performance, going some way towards achieving your broader business goals and objectives.
What’s more, measuring productivity is among the simplest metrics to utilise as part of your digital transformation measurement strategy. It’s based on a universal formula that equates to the value of output relative to the time and resources invested – or how much you’ve got from the amount you’ve put in.
To measure productivity, look at KPIs for a set period; this could be anything from total sales to website conversions. Compare this to figures before the digital adoption, giving you an insight into the productivity achieved.
Metric 4: Revenue
One of the most important metrics to consider as part of any digital transformation strategy – and the one board members of stakeholders will be most interested in – is revenue. Investors and senior managers want to see that new digital technologies are bringing tangible value to the business, and revenue is, of course, one of the main indicators of this.
Analysing revenue as part of digital transformation measurement strategy happens in much the same way as productivity; you compare recent figures to those recorded before the technology was brought onboard. From there, it’s easy to see if a piece of technology is contributing from a revenue standpoint, particularly in relation to its initial purchase cost and long-term ROI.
Metric 5: Number of Processes
How many processes are your teams carrying out via new software and systems? Is it in line with what you had in mind for the new technology? Or are teams still reliant on other tools and platforms which the new system was designed to replace?
For these kinds of insights, you’ll need to invest in digital transformation measurement software, which allows you to quickly see the total number of day-to-day processes being performed by teams across the business. As well as these granular insights, it can also be useful to talk to teams and individuals about their experience of the new technology; is it delivering for their needs and requirements?
Digital transformation is a powerful driver of business growth, but it’s vital that firms measure its long-term effectiveness to ensure consistent ROI and usability. At JS3 Global, we’re specialists in helping brands leverage the right tools and platforms that can take their digital adoption to the next level. For more information or to talk to one of our ERP experts about your requirements, visit the homepage or call us on 0161 503 0866.