Digital transformation is a journey rather than a destination. That can make it tricky for IT teams that are traditionally accustomed to measuring success in postmortem-type results or ongoing performance metrics. However, it’s especially important to track digital transformation progress.
“The harsh reality is that around 70 percent of digital transformations fail, and this was pre-pandemic. COVID-19 is accelerating demand for digital transformation faster than ever before as the pandemic is exposing mass inefficiencies and disrupting traditional ecosystems and business models,” says Kevin McCaffrey, CEO and founder of digital transformation platform provider Tr3Dent. “Now more than ever, companies across every industry must make sure they’re on the right path with digital transformation to ensure business continuity and remain competitive.”
This is true across industries and – increasingly – company sizes and geography. Will every organization evolve into a tech company? Perhaps not, but they’ll get closer and closer to being one.
“Go-to-market strategies, customer interactions, and workforce enablement are all examples of activities that are being transformed by technology,” says Seth Robinson, senior director of technology analysis at technology association CompTIA, “and companies must embrace new mindsets around tech adoption and investment in order to remain competitive.”
Some key indicators show that a business is headed in the right direction transformation-wise. Certain ones will depend upon the organization’s goals for digitization; others are more universal. “Organizations need to define their own criteria of what success looks like,” says Yugal Joshi, vice president of digital, cloud, and application services research for Everest Group. “For example, if they were planning to get onto digital channels, which got accentuated due to the pandemic, their metric will differ compared to if they were focusing more on driving internal efficiencies through digital initiatives. Moreover, their existing and new technology landscape will also play a crucial part in defining these metrics. However, they can learn from their peers and the broader market.”
[ Are your digital transformation metrics up to date? Read also: 10 digital transformation metrics to measure success in 2021. ]
7 digital transformation milestones to watch for
Consider these seven factors that signal your organization is making positive progress along its digital transformation path.
1. Repeatable processes for digital initiatives
This will look different depending on the baseline level of maturity of the organization, says Mark Sami, director of technology at business and technology consultancy West Monroe. Generally speaking, IT functions focused on digital transformation develop an approach to digital projects and programs that serves them well long term.
At a high level, says Sami, these include defining goals; identifying gaps between the current state and those goals; KPIs to measure success; cross-functional pilot teams and processes; enterprise change management; agile training; modern architecture and infrastructure; and ongoing learning, iteration, and scaling what works.
2. Increases in lean business processes
“One interesting aspect of measuring success is assessing the new processes that resulted as part of digital transformation,” says Joshi. “The process needs to be lean, efficient, and achieve its intended objectives by consuming as little resources and time as possible.”
Better utilization of human resources also falls under this category of positive indicators.
3. Shared ownership of digital transformation strategy and execution
It is generally accepted wisdom that digital transformation is not – and cannot be – driven solely by IT. Or by the business. “It is hard for IT teams to react quickly to a business’s needs if they don’t know where the business is going, or if the IT teams aren’t actively involved in business strategy planning,” Sami says.
“There needs to be a major shift at the organizational level to allow the business and technology teams to work together. Ownership of business strategy and technical execution need to be shared,” Sami says.
[ Get exercises and approaches that make disparate teams stronger. Read the digital transformation ebook: Transformation Takes Practice. ]
4. Decreased time-to-market/greater change frequency
Whether your focus is introducing new products and features to customers or employees, an increase in speed is a positive sign. “A great metric to track when measuring your digital transformation journey is the frequency at which you introduce new changes to your business/client/customer/end user,” says Sami.
“This may seem oversimplified and obvious, but it is a great sign of collaboration with business and technology teams. This can be done by solving strategic problems via rapidly deploying, validating, and iterating ideas in the wild – which is at the root of successful digital transformation.”
5. Happier customers and employees
Improved customer or employee satisfaction scores, increased employee engagement, customer growth – all are important mile markers on the digital transformation road. Specifics will depend on the focus of the digital transformation initiative, says Joshi.
6. Streamlined IT
Once digital transformation is successfully underway, IT leaders tend to experience more efficient IT project or program timelines and reduced rework, says McCaffrey. Declining total cost of tech ownership is another metric to keep an eye on in this area, according to Joshi.
7. Improved visibility into enterprise operations
This is, in fact, at the heart of many digital transformation efforts. Thus, achievements in visibility across the company are a clear indicator of progress, says McCaffrey. This may show up as an increase in data available for use in decision-making, operations, or strategy.
[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]