digital transformation 2
Software Development

Top 3 ways to measure the success of your digital transformation

date: 2 September 2021
reading time: 5 min

Research shows that a staggering 7-8 out of every 10 digital transformations end up failing.

Why does this happen, even to the bigger players on the market?

Well, this is often due to two reasons: because they keep on making at least one of these common mistakes, and also because they’re more focused on the process itself (delivering on budget, time and in scope with the requirements) rather than on the results achieved.

However, simply delivering a product according to the plan does not mean that it is or will be a success.

If you want to measure the success of your digital transformation, you need to shift your mindset towards the problems that you want to solve. Because what’s the point of having impressive software if it doesn’t actually change anything or falls just short of expectations?

Check the below top 3 ways of measuring success in digital transformation and ensure the transformation of your company is heading in the right direction.

Prepare a list of non-financial external and internal KPIs

Increased revenue as an indicator of success sounds like a good KPI (and an obvious one), but… there can be many reasons behind growth in profits, some of which may not necessarily be related to the transformation process. And it can be difficult sometimes to tell exactly what is behind it. That’s why you should make a list of non-financial KPIs, both the external (customer-related) and internal (employee-related) ones.

In either case, a set of KPIs should be SMART as well as people-centred, because solving real-life problems is a much better team motivator than just generating more money for an employer or company.

For example, you may want to measure your success in:

  • hours saved by automating repetitive processes – this is much more tangible than being vaguely “efficient”,
  • new customer conversions,
  • employee satisfaction rate – if you were also measuring this before you started your digital transformation,
  • active usage of your new solution – not the number of licences purchased, or downloads or implementations within your company, but the actual adoption rate,
  • service availability rate – uptime/downtime ratio,
  • top technical talents attracted.

Although these KPIs are not completely centred around money and focus instead on problems that lack solutions, solving these kinds of problems also translates directly into financial success – so you don’t always need to put the latter first.

Formulate hypotheses and test them

This is slightly different from setting a regular set of KPIs. Instead of just measuring how much a solution has influenced your organisation, you also define the desired numbers in advance – the minimum that you want to achieve in order to consider your digital transformation successful. All you need to do is go through the following sequence every time you want to introduce an innovation:

  • make observations and formulate a hypothesis,
  • define the indicators of success to be evaluated as the project progresses,
  • run your project and evaluate the results.

This can pertain not only to the digital transformation as a whole but also to individual parts of it, even the smallest ones, like specific features or changes in your website layout. Remember that while thinking big is great, that doesn’t rule out starting small and growing over time.

Actually, it’s just the opposite. Taking things one step at a time pays off – it allows you to make necessary adjustments to small parts of your project, adjust the course, and avoid costly large-scale changes.

Check to see if you’re solving current problems

You cannot be stuck in the past and successfully transform your organisation, especially in isolation from the external environment, which is constantly changing.

This is why you need to stay up-to-date with the most current customer behaviours. Follow these trends closely, because it may turn out that the problems you’re solving right now have already become marginal, and that there are other, much more urgent issues to handle. Agility is the key to success, both in ordinary tech projects and digital transformations.

How strongly a big change in the external environment can influence people’s behaviour is reflected in the chart below:

So, always make sure that you’re answering relevant user needs. You will know that you’ve succeeded when you get new customers (or retain old ones) through the new services, products or upgrades that you’ve made.

BONUS: the importance of digital maturity and Delivery Success Indicators

Apart from these three ways of measuring the success of your digital transformation, there are also two other concepts that you should familiarise yourself with – if you want to gauge the effectiveness of your transformation and see where you are in your journey:

Concept #1: Digital maturity

Digital maturity measures a company’s ability to create value in the digital sphere; adapt to disruptive environments; respond to changes in the market, and take advantage of technological developments.

You should occasionally check on where you are in your digital maturity and see if it is a factor that changes positively over time. There are many models that allow you to track your progress, like this one or that one so just pick the one that suits you best.

Concept #2: Delivery Success Indicators

Delivery Success Indicators (DSIs) are KPIs that help you monitor projects with greater efficiency. They allow you to measure the effectiveness of your digital transformation as it progresses, so that you can:

  • define the status of the transformation,
  • draw adequate conclusions and make changes accordingly,
  • maximise your efficiency.

Wrap up

Now that you have a better idea of how to approach this, you can engage your internal talents and resources to come up with a plan for measuring the effects of your digital transformation – and then execute it.

If you prefer to walk through this step with external specialists take part in our IT Strategy Workshop which is designed to help you work out a high quality IT strategy to achieve your business goals and also come up with a set of appropriate KPIs – the choice is yours.

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