Digital transformation is crucial for organizations that want to keep up with changing customer expectations, develop new business models, and adapt their operations to technological capabilities. The key to effective transformation lies in using results-based metrics for measuring success.
The portfolio of digital transformation projects often includes programs aimed at growth, efficiency, and improving user experiences. However, in order to properly evaluate the outcomes of these programs, project leaders must choose the appropriate key performance indicators (KPIs) that are relevant to their specific initiatives.
On the other hand, transforming the culture and developing digital competencies, which aim to establish a new model of collaboration, requires key indicators for the IT representative. These indicators help management focus their efforts on the right areas, improve communication, and implement process improvements.
It is important to note that these goals overlap with each other, but separating them highlights three key steps that IT representatives should take to ensure that their KPI strategies align with the organization’s main transformation objectives.
1. Defining results-based strategic KPIs
Since both the management team and the board want to know how effective digital transformation is in achieving overall strategic goals, IT representatives should choose key performance indicators that demonstrate the results achieved through the effectiveness of projects within the digital transformation. Examples of key performance indicators can come from the following categories:
– Growth metrics that connect revenues with digital products or technology-enabled sales channels. For example, in the media and e-commerce sector, revenue growth from digital subscriptions and advertising can be measured.
– Efficiency metrics that show the impact of automation and data-driven decision-making. For example, manufacturers can track how much money and downtime is saved through IoT and machine learning-enabled predictive maintenance.
– Customer and employee satisfaction metrics, which can be measured through satisfaction surveys, social media sentiment analysis, growth in revenues associated with strategic customers, and employee retention rates. Asking the right questions and aligning experience metrics with digital strategy and priority initiatives is important.
– Quality metrics that help measure improvements resulting from defect reduction, minimizing the impact of human errors, improving data quality, and other program outcomes that illustrate how improving quality translates into business results.
– Risk reduction metrics that focus on areas such as security, business continuity, and compliance, which are influenced by technology, data, and process improvements.
2. Supporting project leaders in identifying the KPIs for their initiatives
After defining and communicating the strategic KPIs, IT representatives should empower project leaders to suggest the key indicators for their transformation initiatives. By defining at least one results-based KPI in terms of growth, efficiency, experience, quality, and risk reduction, project leaders will have no difficulty aligning them with at least one of the main strategic goals.
For example, Arvind Joshi, Chief Operating Officer for Global Technology and Co-Chair of the Public Cloud Division at JPMorgan Chase, defines key indicators for the bank’s multi-cloud strategy in the following way: “We focus on measuring progress towards set targets, maintaining a balanced approach to results and challenges. We track key indicators related to delivery (on-time delivery, time to market), risk, benefits (time to market, failure to deliver changes, major incidents), and costs (TCO before and after implementation).”
FAQ
Q: What are the key factors for the success of digital transformation in organizations?
A: The key factors for the success of digital transformation in organizations are using results-based metrics for measuring success and selecting the appropriate key performance indicators based on specific initiatives.
Q: What are examples of key performance indicators in digital transformation?
A: Examples of key performance indicators may include growth metrics, efficiency metrics, customer and employee satisfaction metrics, quality metrics, and risk reduction metrics.
Q: What are the key steps that IT representatives should take to align their KPI strategies with the organization’s main transformation goals?
A: The key steps that IT representatives should take are defining results-based strategic KPIs and supporting project leaders in identifying the KPIs for their transformation initiatives.
Q: What are other important areas to focus on in organizational digital transformation?
A: Other important areas in organizational digital transformation include transforming culture and developing digital competencies, as well as focusing on the right areas, communication, and implementing process improvements.
Q: Are there any examples of specific key performance indicators from digital transformation?
A: Yes, an example of a specific key performance indicator from digital transformation could be the indicator related to delivery, risk, benefits, and costs as described in the JPMorgan Chase article.
The source of the article is from the blog be3.sk