Jenny Morris
03 December 2020 by Jenny Morris
Digital Transformation

Even before the pandemic, digital transformation was top of the agenda for many businesses. However, what was once a forward-thinking idea is now an essential survival strategy — a recent survey by IBM found that 60% of businesses across the globe have accelerated digital transformation plans in response to COVID-19. However, measuring the effectiveness of such strategies is a different story altogether. In fact, many companies find it such a challenge that they avoid it completely. According to a survey by Gartner, almost half of CEOs have no metrics for measuring the progress of digital transformation. But why does this matter, and why do so many businesses fail to do it?

Why do metrics matter?

Most digital transformations fail — 84% of them, according to IBM. Appropriate metrics help to mitigate this risk. Peter Drucker, known as the father of management thinking, famously said, ‘What gets measured, gets managed.’ Metrics provide organisational leaders with the opportunity to correct unexpected performance early, identify areas for improvement and adapt their strategy in response.

Furthermore, those in leadership positions must be able to demonstrate the tangible business impacts of digital transformation to stakeholders, customers and those inside the company. A report by the Capgemini’s Digital Transformation Institute found the cultural issues are the number one reason for digital transformation failure. Organisations that clearly communicate to their employees about why they are changing and why these changes are important are over three times more likely to have successful transformations, and metrics are one way to increase employee engagement in the process.

Why aren’t more organisations using metrics?

It’s difficult to identify appropriate metrics because they are not a ‘one size fits all’ tool. Digital transformation varies across company and industry, and so the most useful metrics will depend on the organisation’s goals, the external environment and the type of technology being adopted. It’s also important to choose metrics that can be measured easily in your organisation, to maximise the likelihood of them actually being used and informing decision making.

There’s also a huge number of potential metrics to choose from. For example, this single article lists fourteen different metrics. Gartner’s VP Analyst, Paul Proctor suggests, ‘Select just 5 to 9 metrics to track, report and act on.’ Choosing a limited number of metrics is easier to manage and means you’re more likely to use them.

What metrics should you be using?

So how can you make the best decision when it comes to digital transformation metrics? Gartner suggest that the metric should have a clearly defined and justifiable causal relationship to a business outcome, it should make sense to a non-technical audience and needs to drive action within the business. You should also stick to a limited number of easily measured metrics. When choosing their own metrics, Microsoft emphasised that it was also important to know what an underperforming metrics looks like and that the metrics capture long-term trends rather than brief fluctuations.

Different metrics reflect different aspects of business performance. Useful areas to have metrics on include return on investment, cost control, quality, productivity, customer satisfaction and innovation. There are plenty of lists that suggest the ‘best metric’ but ultimately, this must be guided by the context of the organisation’s goals and wider industry norms.

Metrics are key to successful digital transformation. They provide necessary data for those in leadership positions, and the best metrics will provide actionable feedback to enhance the organisation’s strategy. Just remember, context is everything.