You have likely seen a lot of coverage about digital transformation. Its definition seems to vary depending on the agenda of the source of the information. But a good objective definition of digital transformation is a deliberate move by an enterprise to implement digital technologies that enable the business to change how it delivers value to its customers. In other words, this is a change in how you do business. There are two areas that are commonly affected by digital transformation efforts: the contact center and the customer-facing website.
State of the Market Study
As I was preparing my presentation for a session
on digital transformation for last week’s Enterprise Connect 2019 conference, I reviewed a Webtorials report titled, “2019 Digital Transformation Market Trends Report
.” The report provided the results of a study of enterprise executives’ viewpoints and opinions on digital transformation. The top two benefits respondents identified were delivering better customer experience and remaining competitive. See the chart below from the study.
The Gartner View
Also in the course of preparing for my EC19 presentation, I discovered a good reference from Gartner called, “How to Measure Digital Transformation Progress
.” Paul Proctor, VP and analyst at Gartner, is quoted in the report saying, “Good digital transformation metrics aren’t rocket science, but many organizations struggle because they are all over the map. If you want to find out what is important to the executive team or board, you have to ask them.”
But when it comes to creating digital key performance indicators (KPIs) by which to measure your success, Gartner recommends keeping it simple. The paper shared the following best practices:
- Develop a well-defined, unambiguous, and defensible relationship to the desired business outcome (market share growth, lower cost, greater customer loyalty, etc.)
- Do not wait to see what the market does -- lead, don’t follow
- Know your audience and focus on them, not the whole world
- Ensure what you deliver is in a form that can be understood by a non-IT audience
Your best practices will change throughout a digital transformation because the market, competition, and customer behavior is not static and changing as well. This is to say that digital transformation is not a once-and-done effort. You need to adapt your best practices by regularly reviewing your selected KPIs so you can better ensure you stay on target.
If you select your KPIs correctly you will improve your ability to succeed and be able to describe the success to key stakeholders.
The KPI Questions
The Gartner document also covered its viewpoint about KPIs. You should not look for a standard KPI list to use for your digital transformation. KPI lists can be starting points, but they are designed by someone else for their unique environment so may not be as applicable to what you are trying to achieve at your enterprise. Your KPIs need to reflect and be specific to your industry, and possibly to the geography and culture you operate within as well.
To create your personalized digital KPI list, there are five questions that Gartner proposes you ask:
- What is being measured? Gartner shares an example might be the portion of customer interactions that are going through digital channels. Note that what you already measure in the contact center is different from what you measure for the website.
- What is your present status for measurements? Don’t discard these measurements, but you may have to correlate them differently with new metrics.
- What are the target goals?
- What is the desired business outcome/benefit? You are changing your business, so think about trying to quantify the benefits and value added through the digital transformation -- i.e. revenue growth, increased market share, improved customer loyalty, etc.
- What is the balance point?
Gartner closes the paper with an explanation of a balance point. The balance point describes the reasons why you should not over-digitalize. Doing more of the same does not necessarily produce more positive results. Even if you go for 100% digitization, this does not mean you will deliver more beneficial and cost-effective results. It’s the law of diminishing returns.
CIO Magazine Weighs In
This article recommended:
- Work with senior executives and get their buy-in to quantify the impact that their areas would benefit from digitalization
- Create KPIs and goals that map the digital business journey and focus on the expected business outcomes
- Measure your digital journey progress and the business value it delivers. Measure KPIs that support your specific outcomes and expectations.
Every organization will evaluate its goals differently. How executives measure success will also vary. Don’t look for a cookbook approach to digital transformation. Don’t start your initiative with too many goals, but identify two or three good ones to start. Too many initiatives make it hard to determine what worked, how well, and what is the ROI.