How to Measure Digital Transformation

November 6, 2023
min read
Share this post

Digital maturity and digital transformation are key elements in driving organisational progress and change, but, it's not always easy to know where to start with measuring their success and defining the markers to benchmark said success against.

As a reminder as to what each is, digital maturity serves as the foundation for effectively leveraging digital technologies and strategies to drive innovation, improve processes, and achieve business objectives. It encompasses various aspects such as technology infrastructure, digital skills, data management, and culture.

Digital transformation goes beyond the adoption of digital tools and platforms. Using digital technologies to fundamentally change and improve an organisation's operations, strategies, and customer experiences. Leveraging technology to drive significant and disruptive, positive, lasting changes.

57% of surveyed respondents said that it’s absolutely critical or very important for companies they purchase from to be innovative.

To ensure the success of digital transformation efforts, it is essential to use metrics and Key Performance Indicators (KPIs) to measure progress and outcomes. Metrics and KPIs provide valuable insights into the effectiveness of digital initiatives, helping you to make data-driven investment and resource decisions and correct course when required.

A KPI, or Key Performance Indicator, is a measurable target that shows how well an individual or organisation is achieving its goals. KPIs help to evaluate performance, identify strengths and weaknesses, and guide decision making.

This ongoing journey requires continuous monitoring and evaluation using these metrics and KPIs to ensure its success and value. However, that poses some questions:

  • How can we gauge success?
  • What are the key performance indicators (KPIs) that enable us to track progress and performance?
  • How can we align our metrics with strategic goals and customer expectations?

What follows are some examples of how to respond to these questions and examples of digital transformation metrics and KPIs that can be used to measure the success of your efforts in increasing digital maturity through digital transformation.

Why Measuring Digital Transformation is Important

Assess effectiveness and efficiency

Identify what works well and what needs improvement, and make data-driven decisions to optimise digital transformation efforts.

Demonstrate value and ROI

Quantify the benefits and outcomes of your digital transformation efforts, such as increased revenue, reduced costs, improved customer satisfaction, and enhanced innovation.

Learn more on how to calculate your ROI here.

Align with strategic objectives and customer expectations

Ensure that digital transformation efforts are focused on the most important and relevant areas, and that they deliver the desired results and impact for your business and customers.

B2B companies that successfully master digital transformation have 8% more shareholder returns and five times more revenue growth than their peers.
How to Measure Digital Transformation

To assess the progress and impact of your digital transformation initiatives, it is essential to utilise a combination of metrics and key performance indicators (KPIs) that accurately reflect the outcomes and effects of your project.

Metrics are quantitative measures that provide insights into the performance or advancement of specific activities or processes. KPIs, on the other hand, are metrics that are aligned with your strategic objectives and goals, serving as indicators of the success or failure of your digital transformation endeavours.

As every organisation will have distinct objectives, challenges, and opportunities, there is no universal approach to measuring digital transformation. However, there are general steps you can follow to develop and implement a measurement framework for your project.

Key steps for success:

Define your digital transformation vision and strategy:

  • Identify the main drivers and objectives of your digital transformation efforts
  • Outline the expected outcomes and benefits for your organisation and customers
  • Plan how you will achieve your digital transformation goals

Identify your digital transformation initiatives and solutions:

  • List the specific activities and projects you are undertaking to implement your strategy
  • Highlight the digital solutions and technologies you are using or developing

Select your digital transformation metrics and KPIs:

  • Choose quantitative indicators to measure performance and progress
  • Align metrics with your digital transformation objectives and outcomes
  • Establish processes for data collection, analysis, and reporting

Monitor and evaluate your digital transformation efforts:

  • Determine how often you will measure and review metrics and KPIs
  • Communicate and share results and insights with stakeholders
  • Use data and feedback to improve and optimise your digital transformation

By 2025, Gartner expects 80% of B2B sales interactions between suppliers and buyers to occur in digital channels.
Examples of Digital Transformation Metrics and KPIs

When it comes to achieving digital transformation success, it's important to align your goals and initiatives with the right metrics and key performance indicators (KPIs). The specific metrics and KPIs you choose will depend on your unique business mission and digital ambitions.

While the examples provided below aren't a complete list, they are a good place to get started with measuring how effective your digital transformation efforts are.

Website traffic and bounce rate: Indicating how many people visit your website and how long they stay on it, these metrics suggest that a high traffic and low bounce rate can lead to increased conversions and sales.

Conversion rate and sales: Showing how many leads or opportunities become customers and how much revenue they generate, these metrics indicate that a high conversion rate and sales reflect customer demand and satisfaction.

User experience and customer satisfaction: Assessing the ease, enjoyment, and value of interactions between you and your customers. A high user experience and customer satisfaction score reflects exceptional customer service and customer advocacy.

Cost reduction and operational efficiency: Evaluating the money and time saved by implementing digital solutions that streamline and automate processes. A high cost reduction and operational efficiency score reflect improved profitability and productivity.

Time-to-market and speed of innovation: Measuring the speed at which new products, services, or features are launched to address customer needs and expectations, these metrics show that a low time-to-market and high speed of innovation reflect agility and responsiveness to market changes.

Employee engagement and productivity: Gauging the motivation, commitment, and skills of employees and their task performance, these metrics show that a high employee engagement and productivity score reflect an empowered workforce and a culture of digital transformation, often leading to increased innovation, risk taking and agency.

Agility at scale: Capturing the ability to adapt and scale digital capabilities and initiatives across the organisation. A high score reflects a holistic and sustainable transformation with global behaviours, activity and collective intelligence of strategic importance.

Cross-functional collaboration index: Measuring the degree of collaboration and interaction between different departments and divisions in the organisation, this metric can be calculated using various indicators. A high cross-functional collaboration index demonstrates that the organisation is breaking down silos and fostering a culture of integration and innovation.

Innovation rate and impact: Showing how many new products, services, or features the organisation launches or improves within a given period, and how much value and benefit they create, this KPI can be measured using various indicators. A high innovation rate and impact implies that the organisation is leveraging cross-functional collaboration to generate and implement innovative solutions that meet customer needs and expectations.

According to a survey by Zippia, companies with digital-first strategies are 64% more likely to achieve their business goals than competitors.

We believe in the power of bringing people and technology together to make business better. We know it's an ongoing journey that requires continuous measurement and evaluation to make sure it's a success.

By using a mix of metrics and key performance indicators (KPIs) that match your specific goals and outcomes, you can effectively track your progress and performance. This helps to show the real value, impact and return on investment (ROI) of aligning your people and technology.

We hope this article has given you some valuable insights and ideas as to how to measure the impact of your digital ambitions and projects, and if you need any assistance or guidance during, do get in touch.

We're passionate about helping our clients achieve their digital goals and creating a brighter future business. Get ready to unlock the full potential of your business in the digital age.

Share this post
Digital Transformation
Future Tech
Co-Founder, Yopla
Some of the clients we've worked with...