Digital Transformation Metrics

 Some think digital transformation is just an IT-related project without impact on the lines of business while others believe it is some form of digital business transformation. For a small business to be successful in transforming the company, it is necessary for management  and all departments to understand the goals, metrics, and desired outcomes and to be fully on board. Additionally, everyone needs to know the role they will play throughout the process and after the solution is in production. 

A successful business digital business transformation must have buy-in from small business owners and all the business unit managers even as the concept is taking shape. Each manager has to feel that he is part of the group building the new vision and strategy. Without this occurring, the likelihood of resistance is high, making the probability of success low.

The management team and key stakeholders need to coalesce around a common vision and strategy. Then they must determine their short-term, intermediate term and long-term goals and outcomes. This needs to be true for small businesses and each individual organization. The management and staff must be able to visualize what the new world will look like – whether that is a true total business model transformation or just new customer-facing applications.

 The Metrics

The metrics fall into four different categories: financial, operational, quality, and customer/user experience. It is important that all metrics be actionable and quantifiable. Below is a list of key metrics for each of the categories.

Financial metrics:

• New or additional revenues resulting from the new/enhanced applications
• Increased margins
• Share of customer voice and/or wallet
• Reduced customer acquisition costs or cost to acquire $1 annual contract value
• Increased customer lifetime value (CLV), including improving retention rates
• Growth efficiency

Operational metrics:

• Deployment frequency (# per year/days/weeks/months)
• Lead time for changes (minutes vs. weeks/months)
• Change failure rate (i.e., failed deployments)
• Mean time to recover (MTTR)
• Percentage of work done manually (configuration, testing, deployment, approval)
• Deployments without downtime (or minimal)
• On-demand delivery/deployments
• Automation of CI/CD – testing on demand
• Reduce process cycle time

Quality metrics:

• Less time spent on unplanned or rework vs. more time on new work
• Number of new features/ numbers of backouts
• Number of deployment defects, including security CVEs
• Number of incident tickets by severity

Customer/user experience (UX):

• Consistency of UX across enterprise (divisions, websites, customer service, etc.)
• Customer friction – i.e., ease of use – as measured by completed tasks or abandoned carts or tasks, and response time
• Uptime/availability of applications
• Self-help capabilities
• Chat capabilities
• Percentage of interactions that are digital now vs. legacy methods

Additional Considerations

One of the features of digital transformation is the integration of various groups effected by the transformation into a team working to deliver the new business model and solutions. They need to share responsibility for communicating, designing, and delivering solutions that meet expectations. As a result, these integrated groups should be able to independently make decisions and not need to seek permission from or be dependent upon others.

Summary

More than 70 percent of digital transformation projects fail, according to the Everest Group. There are six reasons why: lack of upfront and continuing commitment and engagement from all levels of impacted management and stakeholders; failure to use agile development process instead of the lengthy waterfall process; an assumption that the project is an IT project, not a business model change project; unclear goals, vision, and metrics; lack of strong project management, including change management, and lack of scalability of the new applications and/or processes.

Digital transformation, or what is more correctly called business model innovation, is not a strong suit for most organizations and therefore the odds of failure are high. To ensure that the business model change is successful corporate, line of business and IT executives must be engaged from the start and remain heavily involved in all phases of the paradigm shift. Additionally, clear goals, outcomes, and actionable metrics must be put in place with a strong governance group and steering committee overseeing each step of the process.

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