Today, by 2020, many companies and organizations have already gone far along their path of digital transformation. Far enough to focus on the real return on investment in these initiatives and transition from pilot or point solutions to scalability at the enterprise level. All of us are waiting for economic returns and are working on process reinventing, accelerating technology and changing business models for one purpose - to make more money.
I attended one event where senior IT professionals and executives had to ask one major question about digital transformation. Over 40% of the questions were related to measuring success – which means this point is indeed critical. Although each business will have its own way of measuring the return on investment, there still are some general principles.
Decide on the goals. The questions are - what do you want to achieve with digital transformation and why is this goal important for your organization? If you automate manual processes, you need to understand whether increased efficiency will free up employees' time and how you will manage this free time to do other work. If you optimize your warehouse and logistics — what exactly do you achieve — lower inventory, faster supply chains or better incident handling?
Different people may understand the same goals differently. For example, if management seeks to increase EBITDA by introducing AI throughout the value chain, then at the operational level, manager might be too focused on indicators such as user experience (UX), reserves, etc., without concentrating them around EBITDA. The solution to the problem should include not only the adjustment of the management model to the goal, but also the motivation for the main goal of all the people involved.
Select metrics. How to measure success when you reach your goal? What data needs to be tracked and analyzed? For example, if you are improving the quality of customer service, collect and analyze their response and track loyalty. If you are improving the sales process, the metric may be the conversion at certain stages of the sales funnel or the size of the average check. If you automate the routines of your employees, calculate how many man-hours you save per month.
Specific indicators may not improve immediately. If you provide your team with new digital tools, it will probably spend more time doing work than before, which makes you worry about performance degradation. However, this is only a temporary side effect. When people learn how to use digital tools efficiently, you will see increased productivity. Such initial delays can be expected at many points, just give time to master.
Learn someone else's success. Correct understanding and experience can and should be replicated. If you are embedding a digital platform in your business, engage the success teams of other clients at the very beginning of the process. Engage with them to improve your strategy, solve problems and track your return on investment from day one.
The experience of Noventiq gives us the opportunity to provide customers with access to a huge archive of successful digital transformations in a wide variety of industries. We always focus on practical, measurable benefits for customers and real returns. We understand the return on investment as follows: an increase in productivity by 25%, an increase in the level of customer retention by half, or an acceleration of triple growth compared to competitors.
So, specify goals, choose metrics and rely on someone else's experience. These three components will help you invest in digital transformation consciously and benefit from this investment.