Companies undergoing digital transformation face many challenges.
As we’ve discussed previously, established businesses might be struggling to understand what is needed and why, while watching digital-centric start-ups leap ahead in the market. A company might also have significant internal resistance to change, or perhaps they can’t find the right person (in the right role) to lead the transformation, or maybe they’ve gone to a lot of trouble to collect customer data but now nobody has any idea how to use it.
Yet perhaps the biggest digital transformation misstep we’ve seen is simply a lack of vision. Not only a failure to clearly define where they want to go and how they will get there, but also how they intend to measure that success.
Which is where digital KPIs come in.
The use of digital KPIs to drive transformation success
Key performance indicators (KPIs) have long been used in business to identify how successful something (or someone) has been. In this case, a digital KPI can be understood as a measurable value used to see how well the digital transformation is progressing.
The word ‘progressing’ is key here. Because digital transformation is not a finite event, but rather an ongoing process that requires monitoring, adjusting course and pivoting where needed. Any digital KPIs you use to measure your transformation should not be solely focussed on eventual outputs (such as the percentage growth of your digital revenue when compared to the total), but include ongoing measurements too.
A smart approach is to break them down into smaller achievements to be checked off on a regular basis. These could be as simple as setting targets for website visits or conversions or even app downloads, measured on a weekly or monthly basis. Just make sure these metrics can help you gain a clearer picture of your digital transformation progress (allowing you to correct course on more of a real-time basis), as well as give your team the opportunity for a more consistent boost in confidence as they hit those targets.
What are the popular digital KPIs companies use?
A recent IDC survey (sponsored by Infor), has revealed some interesting statistics about the state of digital transformation across the globe. First and foremost, it highlights the obstacles facing businesses seem to be more to do with people and processes than technology—with business models (32%), company culture (29%) and organisational structure (27%) the top three reported challenges.
The report also revealed that two of the top three digital KPIs used by businesses relate to these people and processes. The most used KPI was ‘improved analytics’ which would aim to better predict customer decisions and demands through careful analysis of all collected customer data. The second was ‘improved workforce productivity and decision-making’, likely to be measured using in-house data specifically tailored for that industry and working environment.
The third top KPI used was slightly more technology focused, with companies looking to measure the use of new digital tools and their contribution to the growth of the total revenue. And while it might seem like this should always be the focus, again we should stress that measuring these types of eventual outputs can only give you so much information on the ongoing progress of your digital transformation.
This particular survey was interesting in that it only detailed the popular digital KPIs companies used, not necessarily how effective they were. So there’s still some scope for improvement in businesses seeing the merit in moving to smaller, more regular measurements. Because while the end result might be good, if you’re unaware that people and processes leading to that point aren’t performing as they need to, the transformation is unsustainable and you’re likely to have problems later down the line.
Keep your metrics simple and don’t give too much weight to eventual outputs like digital revenue growth or market share, over smaller and more winnable targets like website conversions or app downloads. Your digital KPIs are not only there to help you create the perfect environment for digital transformation success, they’re also invaluable in helping you stay on track through the process. By doing this, you’ll avoid unforeseen problems, help to consistently motivate your staff, and ensure you can optimise your transformation for even better results.
Want to chat about how to best measure your digital transformation? Get in touch and we’ll be happy to guide you in the right direction.