Why metrics are needed to keep tabs on digital transformation

Posted Jan 3, 2020 by Tim Sandle
In order to keep tabs on digital transformation and to ensure that projects are on track, organizations should use data to measure the performance of their digital transformation initiatives.
 Digital transformation  is the change associated with the application of digital technology in all ...
"Digital transformation is the change associated with the application of digital technology in all aspects of human society," Wikipedia.
Digital Journal
It is well established that in order to survive and thrive in the new economy every business needs to become a digital business today and this means technology at the core. However, many businesses stumble with digital transformation projects. This is for various reasons, stretching from a lack of leadership (accompanied by not embedding digital technology throughout the business) to failing to understand what the customer wants (and commerce is now increasingly customer led).
As well as formulating a robust strategy, business leaders need to ensure they have a good set of metrics in place in order to keep track of the various projects that will form the digital transformation strategy. Often metrics come in the form of Key Performance Indicators (KPI). These are measurable values that demonstrates how effectively a company is achieving key business objectives.
According to a summary provided Gartner, the best metrics for digital transformation will:
Have a clearly defined and defensible causal relationship to a business outcome
Work as a leading, not lagging, indicator
Address a specific, defined audience
Can be understood by a non-IT audience
Drive action when they change from green to yellow to red.
What are examples of appropriate metrics?
General metrics
As noted by John Western, the types of digital transformation metrics that a company can consider include:
The data sources participating in an integrated search.
The number of entities that were consolidated during the transformation.
The rate of operationalization of transformation projects.
The amount of money being spent on projects.
The additional time staff members have to focus on larger goals after the automation of tedious tasks.
He notes that these general areas need to be turned into company specific targets.
Customer value
Jim Highsmith, Linda Luu, and David Robinson have written a book titled EDGE: value-driven digital transformation. In the book they put forward one key metric as the customer, writing "We believe the new metric leaders should be looking at are those focused on customer value."
Customer experience
Another important metric is with measuring how successfully a customer can navigate across an ecosystem. This is where true digital transformers will be looking for signs of improved customer experience.
An example of an internal metric is productivity, which relates to volume or value of outputs relative to the time and resources invested. Where a company has invested in a digital tool to support customer support, the firm can seek to measure how well the system is operating and how effective training has been. For example by assessing the number of support tickets the team can handle since implementing the new system.
Another type of metric relates to understanding a firm's own selling prices and that of a competitor. For example, understanding by undertaking analysis of current price metrics for virtual reality devices.
Gathering data
According to analyst James Warner the Internet of Things provides a source of information for gathering data that can be used for metrics purposes. This including tablets and smartphone that synchronize with mobile software available on Android, iOS, and Windows platforms.
There are many other examples of metrics, relevant to specific businesses. The aim here is to offer a taster as to the power and necessity of metrics, as part of ensuring digital transformation success.