Identify critical metrics to measure digital transformation success

Digital transformation is becoming more popular, and many companies are trying to leverage it. They are trying to incorporate the latest technologies and innovations into their business. Many companies were forced by the pandemic to change their ways of working quickly and to speed up the digital transformation initiatives that they started.

The truth is that companies spend thousands of dollars on digital transformation, and they just hope for the best. Most of them don’t even have ways to measure the success of the implemented changes. If a company doesn’t have a clear strategy for starting with digital transformation, implementing the changes, and measuring success, they might not even see if things go wrong. 

Innovation for the pure sake of innovation is not always good. This is why whenever you start implementing your first activities towards digital transformation in your company, you should come up with a way to measure their success.

What are the metrics to keep in mind?

Here are a couple of the most critical metrics:

Active usage metrics — Digital transformation is not something you just start, and it will maintain itself on its own. You will have to adopt many tools that, in the end, hopefully, will improve your business metrics. However, what if you invest a lot in new tools, but people are not using them? This is why a KPI you should check is if people are actively using your digital assets. Many tools offer this possibility to check the daily usage or at least if a license has been activated. 

For example, if you bought software meant to be used by 100 people but it’s used by only 20, then it is definitely not worth the investment. For software purchases to be justified, the tool in question should be used by at least 70% of the people it was meant for. Otherwise, the adoption rate will be too low, and people will never start using the tools you are getting for them. A low adoption rate can actually harm your digital transformation processes.

User engagement and participation level — If you check the end-user engagement and the participation level (internal and external), you can understand better where you are on your way to digital transformation. Some metrics you can keep in mind are:

• Net Promoter Score;
• Exit rate; 
• Employee satisfaction index; 
• Bounce rate.

If end-users or employees are not engaging in the way you expect them to, it will show you that maybe something is not working as it should. It might be that the tool that you decided to use is not the perfect one, or people just are not familiar with it. You need to make sure that your employees are willing to shift from their existing work patterns but also to support them on their way. 

If you incorporate tools that save time for your people and make work easier, they will appreciate it. If your digital transformation is going according to plan, then your engagement rate will be going up and also the employee satisfaction index.

From an end-user perspective, you will have to work on the UX and UI of the software you are offering. If the software is working correctly, it is already great, but your exit and bounce rate will be very high if the tool is hard to operate. This is why you need to make it user-friendly and understandable to improve your KPIs.

Adoption rate — For many people, this metric is very similar to the active user metrics, but it is actually different. Adoption is the KPI that will show you how well your people accept the new tools. The difference is that people might use it, so you have a high rate when it comes to daily active users, but employees might not want to accept the tools because they don’t like them or understand them. In this case, the adoption rate will be very low. 

A good adoption rate is crucial for successful digital transformation because otherwise, all of your efforts will be in vain. It will mean that people are not willing to accept changes for some reason. Make sure to ask them for feedback and understand why they don’t like the changes or the tools. Based on that, you can adapt your strategy. 

Productivity — If your productivity increases, this will mean that the changes you implemented work. Maybe the tools you introduced help people to save time and provide them with great value, or perhaps you just optimized your processes in the right way. Whatever the reason is, the productivity improvement is a clear sign that you are on the right path.

Return of investment — Each digital transformation initiative will take some time and money. In some cases, it can be even significant investment. So, one of your main metrics on measuring success is if the return on investment is good enough. You shouldn’t just get any tool you like because you think it might be even slightly beneficial for your company. 

When you draw the line, you need to make sure that all of the investment you make is worth it. You can calculate how much money a tool saved you based on increased productivity, new users, or decreased working hours spent on doing a specific task. Sometimes it might be a bit hard to calculate exactly how much money a digital transformation saved you, but even a rough number will be good enough. 

What is considered digital transformation success? 

If most of the metrics are following a positive trend, it would mean that your digital transformation is on its way to success. If your team adopts the new tools to help them improve their productivity, and the engagement rate is good, then you did things right. However, don’t get lost along the way and try to change too much without having a good strategy. Make sure that each of your digital transformation initiatives aims to solve issues you have in your company and measure its success. If it performed well, go to the next steps until you reach your desired level of digital transformation.