A hard truth about companies today is that they constantly need to find new ways to improve user experience. And one of the ways they are doing this is by investing in digital capabilities. Research by IDC shows that global spending on digital transformation (DX) reached $1.8 Trillion in 2022, a 17.6% increase from 2021.
But are all these investments really successful? Not really.
Studies have shown that nearly 87% of these programs fail to meet expectations. And when asked why this happened, there is usually a lack of clarity.
This is where digital transformation metrics come into play.
Digital transformation metrics measure the success of a company's digital transformation efforts and shed light on how they drive business value. These metrics provide a way to track progress and identify improvement areas. They can help businesses make data-driven decisions on what they should do to increase the impact of their investments.
To help you get started, we have listed crucial digital transformation metrics you should monitor for a holistic view of your DX efforts.
But before that, let’s understand some of the basics first.
What is digital transformation (DX)?
In a nutshell, digital transformation is a process that involves using technology to improve existing business processes, transform organizational culture, and drive change. And the path of digital transformation for every company is unique.
For instance, a company may use AI and machine learning to reduce the time to market its products. Another may integrate employee engagement tools into its workflows to reduce attrition rates.
How do you measure the success of your DX efforts?
We have talked about digital transformation metrics being the ultimate key for businesses to understand how their DX efforts drive business value. Given the scale and complexity of these initiatives, it is critical to measure the results continuously and recreate your digital roadmap. Without further ado, let’s move on to the top digital transformation metrics to analyze the impact of your DX efforts accurately.
- Customer Experience
Ultimately, 86% of buyers are willing to pay more for a great customer experience. So if your DX efforts aren’t improving customer experience, it’s time to reassess your investments. To understand whether your DX efforts are affecting customer experience, it is crucial to do a before-after analysis.
For instance, if your company decides to use chatbots, it is critical to measure the impact of chatbots on customer satisfaction. You can send customer surveys, collect data at touchpoints, or look at the engagement rates to see if the audience is connecting with the technology.
Some metrics you need to have handy to measure the impact of DX efforts on customer experience are:
- The customer satisfaction metric (CSAT): helps gauge how satisfied a customer is with a product or service. It considers customer feedback, either through surveys or interviews. This feedback is then analyzed to determine the level of satisfaction customers have with the product or service.
- Customer effort score (CES): makes you analyze how much effort a customer had to put forth to complete a task. CES scores range from 0 to 10, with 0 being the lowest effort and ten the highest.
- Net promoter score (NPS): measure the likelihood that a customer will recommend the company's products or services to others. You calculate it by asking customers to rate whether they will recommend a company on a scale from 0 to 10. Customers who give a score of 9 or 10 are promoters, customers who score 6 or below are detractors, and customers who rate a 7 or 8 are known as neutral.
An underrated digital transformation metric that most businesses forget to measure is time-to-market. Since speed is an undeniable factor in beating the competition, your DX efforts must support your organization’s ability to get applications ready for launch on time.
If there are still long delays in launching applications, it is an indicator that your efforts are failing. You need to reassess the situation. Research by Mckinsey shows that organizations should consider the following measures:
- Deployment speed: measures the efficiency of an organization's ability to deploy new software versions into production.
- Cycle to market: measures the development speed at which a product goes from concept to market. It helps to analyze the time, resources, and effort required to bring a product to market.
- Release frequency: Helps understand how often software development teams deploy new versions of their software. It indicates the development team’s productivity and agility, as it reflects how quickly they can respond to customer feedback and requirements and make changes to the software.
- Return on digital investments (RODI)
RODI is about comparing how much you spent on technology adoption with the amount of revenue you’ve brought in. It may seem standard practice to monitor the RODI metric, but research shows that only 23% of executives do that systematically. With this in mind, here are some guidelines you can follow:
- Develop a systematic approach for digital capital allocation.
- Ensure that you are starting on business areas with high-value use cases. For example, if you are in the insurance sector, using RPA has benefited many companies. So start with a digital business case that has shown positive results.
- Align digital capital allocation with strategic organizational goals, tech portfolio, and the possible impact on business areas.
- Revenue-based KPIs
Besides delivering better value for customers and employees, digital transformation also helps companies explore new revenue streams. Hence, it makes sense to analyze how your organization’s financial income was impacted by your DX efforts.
To do that, here are the top metrics you can keep track of:
- Revenue from new digital services: If you were able to create a new product or service with the adoption of new technologies, it is crucial to track its revenue stream and consider it for financial review.
- User base: If technology adoption helped you expand your user base, it indirectly impacts your revenue streams. This metric is crucial for SaaS and subscription-based businesses.
- Customer lifetime value: If technological improvements are helping you retain customers, then it is affecting your revenues. So you should analyze the customer lifetime value metric.
- Workplace-based KPIs
Leveraging technology to improve operational efficiency and effectiveness is essential. Workplace-based metrics are essential to gain insight into how technology is helping employees play the role of disruptors instead of facilitators.
Here are the top workplace-based KPIs to keep track of:
- Hours saved: You can calculate this metric by taking the total number of hours spent on a task or process manually and comparing it with the number of hours saved through automation. This calculation measures the efficiency of a particular process over time.
- Revenue-per-employee: It tracks whether revenue-per-employee has increased after the application of the DX initiative.
- Team morale: It is critical to focus on how technologies impact the culture. This metric measures the satisfaction and well-being of employees and helps you determine how healthy and positive the work environment is. You can collect the data through quantitative feedback surveys and interviews.
Kickstart your digital transformation journey today!
Across industries, companies are using digital transformation to gain an edge. And while it takes time to implement every initiative, it doesn’t have to be complex. For your digital transformation journey to take off, you should create a full-proof strategy with all hands on deck.
And if you need help connecting the dots, we can help.
ATC has been a pioneer in helping companies succeed with technology. Whether you need cloud experts or want to reach the MVP stage, we have an experienced team willing to take on any challenge. Our team will help you align strategy, technology, and transformation to deliver impact. We are happy to discuss your project. Just drop us your details here.