How Do You Measure Digital Transformation? 5 Metrics to Know
Executing a digital transformation initiative is a major undertaking for even the most experienced CIO. But the work doesn’t end there. Creating meaningful KPIs can be an even more taxing experience. Measuring digital transformation progress is such a challenge that many companies avoid monitoring it altogether. According to Gartner, almost half of all organizations have no metric to measure digital transformation. Many companies get so caught up in the excitement of launching a groundbreaking digital transformation initiative that dryer matters like KPIs get pushed to the background.
Without a framework to measure digital transformation, success will evade youUnfortunately, this an oversight that cripples many transformations before they get off the ground. IBM finds that 84% of companies fail to achieve digital transformation. But with a developed system for monitoring progress and identifying weak points, it’s possible to course correct along the way to achieve greater success. Pinning down metrics to measure digital transformation is a challenge. When digital transformation looks different for all organizations, there are no universal metrics that apply to all enterprises. Where some companies are introducing digital systems for the first time, others are migrating from legacy systems to more sophisticated cloud-based platforms. Still, others are adding new apps and tools in a piecemeal fashion to supplement their existing digital activities. Moreover, digital transformations can take place on an enterprise-wide scale or within a particular department. The lack of consistency in digital transformation initiatives makes creating KPIs a challenge.
The best KPIs to measure digital transformation progressThere are many ways to assess the progress and efficacy of your digital transformation efforts. Here, we’ll cover five important metrics.
- Measure the number of users relative to the number of licenses purchased
- Analyze the breadth and limitations of usability
- Count the number of processes performed on new software
- Productivity indicators
- Amount of new revenue attributed to digital investments
1. Measure the number of users relative to the number of licenses purchasedOne way to measure the effectiveness of your digital undertakings is by comparing the number of licenses you purchased to the number of employees who are actually utilizing the software. This measurement gives you a basic sense of the adoption rate of your software investment. For instance, if you see that 90% of your licenses are being used, you can assume that the tool has been adopted. If just 30% of your licenses are being used, lack of digital adoption is an obvious barrier. But if you want to truly understand how your investments are being used to promote your digital strategy, you’ll want to take a closer look at digital adoption.
2. Analyze the breadth and limitations of usabilityMeasuring exactly how your digital tools are being used will give you a clearer picture of how well your employees have adopted the tools and actually achieve meaningful benefits. To do this, you’ll need a solution that enables you to view the user journey and analyze where bottlenecks and friction occur. WalkMe’s Digital Adoption Platform (DAP) provides such information via its Insights layer. With Insights, you can see the full picture of adoption, which is one of the strongest indicators of overall digital transformation success. You can see where each individual user struggles in processes, which features are being underutilized, and how to improve usability.
3. Count the number of processes performed on new softwareIn addition to understanding the overall level of adoption and usability, you’ll want to know how many processes are being performed on your new software. This will give you an idea of how much value your software investment is bringing. Realizing that few processes are being utilized can indicate a couple of different things. One is that the tool itself isn’t as relevant to the needs of your employees as your initially thought. The other possibility is lack of digital adoption. If this is the case, Insights from the DAP can pinpoint the reason why. If poor usability is standing in the way, insights into the user journey can show you areas to simplify processes, provide greater training, or introduce automation or other targeted interventions.
4. Productivity indicatorsDigital transformation is not a standalone initiative. Each digital investment you make should support the broader goals of your business strategy. There are many ways to measure the impact of your digital transformation on your overall strategy. One of them is productivity, which is generally understood as the volume or value of outputs relative to the time and resources invested. For example, if you invested in a digital tool to support customer support, you can measure how many more support tickets your team was able to handle since implementing the new system.
5. Amount of new revenue attributed to digital investmentsSimilar to measuring productivity, you can measure how much your digital investments influence revenue. For example, if you introduce automation into your customer journey, you can track how many prospects interacted with the tools and compare how many among them became paying customers. Internally, you can see how various digital tools support efforts to bring in more business or improve operational efficiency.
Focus on the right metrics and guide your initiative to successDigital transformation may vary tremendously from organization to organization, but there are some common metrics you can depend on to measure the success of digital initiatives. Success requires consistent monitoring and course correction based on what you find out. A reliable analytics system that provides clear insights on platform usability is fundamental to understanding key metrics like usability and adoption. No matter which metrics are most important to you, the first step to achieving the ROI you set out for is determining how to measure digital transformation.