Digital Transformation KPIs: How to Measure the Success of Digital Transformation

Whether you like it or not, business is becoming increasingly digital.

Technology plays a critical role in how your business operates, from how you communicate with customers to the speed of the sales cycle to employee productivity. And in most cases, that’s a good thing – as long as you’re keeping up with the latest digital trends.

Digital transformation (DX) is the most important of these trends. In fact, it’s important enough to become the top priority for 74% of organizations.

Digital transformation is the adoption and integration of technology into your business’s products, services, tools, processes, and overall operations. It’s an essential step in ensuring your business is as efficient and future-proof as possible, allowing you to stay ahead of your competition with the best systems and tools available.

However, digital transformation can prove to be a significant challenge both to implement successfully and measure its success. One reason is that it’s difficult to pin down exactly what a successful digital transformation is because everyone’s goals and reasons are different.

In this piece, we’ll explore what success in digital transformation looks like and how you can measure your digital transformation success with the right KPIs and metrics.

What Does Success Look Like for a Digital Transformation Project?

In digital transformation, success looks different for every organization. 

Some organizations are happy with successfully implementing their new systems and resources due to the sheer complexity, cost, and scale of digital transformation efforts. They’re just glad to be done overhauling everything and moving on to maintaining their new approach.

However, most organizations adopt digital transformation to improve their operations as a whole. Their success includes better outputs from improved systems, efficient processes that improve employee experiences and reduce work, and improved KPIs and metrics that indicate progress instead of the decline DX initially creates.

Digital Transformation Goals Will Define Your KPIs and Metrics

Before you begin a digital transformation, you need to know why you’re doing it. 

While it’s true that modernization is important for staying competitive, it can also be a significant waste of time and money. Jumping into the process without a goal makes it more difficult to measure how your transformation is progressing and whether the changes led to improvements.

Instead, your digital transformation should have a clear goal, like improving the customer experience scores, shortening deal cycles by 25%, or increasing revenue by 10%. To do so, you must identify a purpose, align your goals, identify the outcomes that would qualify as a success for your organization, and find the right metrics to measure your progress.

Metrics to Use to Measure the Success of a Digital Transformation Project

Digital transformations have a lot of moving parts, so it’s hard to keep everything on track without a simple way to measure progress and overall success.

Here are some general metrics and KPIs you can measure to see whether your DX project is succeeding or if certain elements of the transformation need additional resources. They’ll also help evaluate your pre-DX and post-DX performance to see how effective your changes are overall.

#1 User Adoption

No matter how much research, time, or money you invest into new tools and systems, you still need your employees to adopt and use them effectively if you want to reap the benefits. If they’re slowing your employees down and hurting productivity, they won’t want to use them.

KPIs for user adoption you should measure include:

• Adoption rate (%)
• Active users
• Average time spent
• Retention (%)

If these metrics are low, it usually means employees need more training, or you need to switch systems to something that better fits their workflow.

#2 Time to Complete a Task

You always want to improve your business’s efficiency, which is often a result of successful digital transformations. However, things don’t always go smoothly during the early stages of DX processes, so tracking the time it takes to complete a task as you go tells you when a process or system needs a tweak to become more efficient.

In many cases, measuring the time it takes to complete tasks before and after transformation can give valuable insight into whether the changes were ultimately worthwhile.

#3 Employee Productivity

Equipping employees with the right tools and giving them proper guidance with efficient processes improves their productivity. But at the same time, productivity is one of the first metrics to fall as a result of digital transformation because workers often have to change how they do their jobs, which can take time to get used to.

To ensure you’re allowing employees to be as productive as possible, keep an eye on:

• Task completion rate
• Output per employee
• Error rates

If these KPIs are low or not progressing, you should revisit the processes and tools employees use to do their jobs.

#4 Customer Experience

Digital transformation impacts customer experiences in two different ways, depending on your type of business.

If your customers interact with your technology directly, you’ll need to monitor how DX changes to your products and platforms impact their experience.

Alternatively, digital transformation may change how your sales reps communicate with buyers during sales cycles or agents message customers when providing customer service. 

The new tools and processes you implement may slow down or decrease the quality of communication and customer service, also leading to worse customer experiences, making it essential to track KPIs like:

• Customer effort score (CES)
• Customer satisfaction (CSAT)
• Net promoter score (NPS)

Low customer experience and satisfaction may mean employees are struggling to be efficient with their new tools, new processes are inefficient, or your customer-facing products need additional testing or resources so they’re easier or more effective.

#5 Financial Metrics

Digital transformation often requires a significant investment in the people, systems, tools, and resources necessary to successfully digitize your organization. And above all else, the overarching goal of digital transformation is to position your business to make more money.

When you monitor financial metrics, you can be sure you’re achieving short-term and long-term benefits from all your hard work. Monitor your digital transformation’s:

• Return on investment (ROI)
• Cost savings
• Revenue growth
• Profit margin

A digital transformation that doesn’t improve your bottom line or increase revenue often means other metrics like efficiency and or productivity are falling behind.

Focusing on the Right Metrics For Your Digital Transformation Strategy

Choosing the right metrics and KPIs for your digital transformation is the best way to ensure it progresses how you want it to. And that starts with outlining your DX goals.

For example, if you’re looking to improve your profitability, you would measure productivity, time to complete tasks, and financial metrics. These metrics and their KPIs ensure your workers are making the most of their resources during their work day and allow you to evaluate whether your digital transformation changes are generating revenue growth or costing you money.

If you jump into digital transformation without a goal or the right metrics to track, you risk wasting money on changes you don’t need and failing to identify whether your transformation is successful or not.

Tips for a Successful Digital Transformation

Digital transformations can be intimidating. Between the interruptions in your output and the investment it takes to make the changes you need to improve your operations; a lot can go wrong.

Here are some tips you can use to prevent costly mistakes and improve your chances of a timely, cost-effective, and successful digital transformation.

TIP #1 Focus on the Employee, Not Just the Process

It’s easy to get caught up on all the technical elements of a digital transformation, but you also need to focus on the human element. Workers don’t want to suddenly become unproductive and have to work twice as hard to do the same just because of new tools they don’t understand.

Your employees can make or break your digital transformation based on how they adopt the changes and put the new resources to use. And much of the time, their willingness to embrace new processes and tools depends on how involved they are in the shaping of them and the level of training you provide to help them be as efficient and productive as possible.

Collect employees’ feedback using employee surveys before you begin your digital transformation to see what they need to do their jobs better. Then, during digital transformation, listen to their feedback and adjust the processes and tools they use based on their feedback to minimize the amount of work they have to do as part of their jobs.

TIP #2 Audit Your Existing Processes

Processes guide the way your employees work, but they’re not always up to date–especially during a digital transformation initiative.

Your systems and resources are likely to change as a result of the digital transformation, so your processes should reflect the most efficient way to operate in the new environment.

Before your transformation, identify the processes that no longer make sense and work to adapt them to your new systems. Then, during your transformation, you can use process mining tools to evaluate your new processes and refine them based on employee usage data to help optimize worker efficiency.

TIP #3 Have a Well-Defined Strategy

If there’s one tip that’s absolutely crucial, it’s to ensure that you have a well-defined strategy for your digital transformation. Only about a third of these initiatives are successful because there are many people, departments, processes, and resources involved, making it hard to coordinate the timing of everything and align the focus of everyone involved.

Before you make any changes, create a plan that includes your goals, KPIs to track, a roadmap that ensures you don’t miss critical steps, and a timeline that everyone can agree to. 

It also helps to get expert assistance in creating this plan, with digital transformation specialists increasing your odds of success by 600%.

TIP #4 Prepare to be Agile

While digital transformations move quickly, most organizations don’t. 

As you implement changes to your core systems, you need to be ready to troubleshoot and resolve any costly and lingering problems that arise as a result of your initiatives. 

You don’t want your sales or customer service teams to be limited for weeks at a time because something isn’t working–you must identify the problem by looking at metrics, KPIs, and feedback that points to an area for improvement. Then, you need to quickly make any necessary decisions to avoid further disruptions both to your transformation and business efforts as a whole.

Ensuring a Successful Digital Transformation Project with FOUNT

Digital transformation isn’t easy, but it’s possible with the right preparation, knowledge, and resources.

You need to choose a goal for your transformation that your entire organization can align with, so you know what metrics and KPIs to use to measure your progress.

A successful digital transformation also relies on frequent evaluations of your progress and the adaptability and agility to make changes quickly as you identify areas for improvement.

FOUNT helps you gain the insight and collect the feedback you need to ensure your transformation is progressing effectively. You can also use it to collect pre-transformation feedback to track whether your initiative helped or hurt your organization’s ability to meet your goals.

Using surveys, you can ask employees for feedback about core processes like providing customer service, completing tasks, communicating with other employees or managers, and any other area where digital transformation may create pain points.

As you collect feedback, it tells you where you need to focus your resources to help your digital transformation progress, what processes or tools aren’t working and evaluate whether the initiative successfully achieved your goal.