The APQC Blog

How Do Your Digital Transformations Measure Up?

Last month we discussed digital transformation and where so many organizations go wrong. Mainly the misunderstanding of what it means to be “transformational” and the need to connect your digital efforts to an overarching strategy.

We wanted to learn more about your digital efforts and since then conducted a short poll on digital transformation drivers, governance, and measures of success.

So, what did we find?

What’s Driving Efforts?

Despite the hype around digital work’s ability to spur innovation and improve customer experience, customer experience came in third for most important driver. Instead organizations indicated their digital transformations are driven by operational needs—optimizing core business processes and automation.

Unfortunately, these findings spur even more questions.

  1. Are there different digital transformation archetypes?

  2. Do the drivers change over time?

  3. How do digital transformation programs differ based on their drivers?

However, it’s important to note that these operational drivers are not necessarily, at odds with innovation or the customer experience. Automation and process optimization efforts—while often associated with cost and efficiency—should also include innovation and improving the customer experience.

Who’s Leading the Charge?

Given the “digital” nature of these transformation efforts, most organizations assume these initiatives fall into the IT team’s wheelhouse. This means that most organizations rely on their IT departments to oversee their digital transformations. Typically, under the guidance of a steering committee comprised of senior executives. However, IT-led efforts may falter unless backed by a strong, business strategy and change management plan.

Fortunately, the second largest number of organizations are turning to their strategy and transformation offices to lead their transformations. Not only do these teams bring a holistic perspective to organization’s efforts they also have strong implementation competencies. Particularly regarding managing and developing a strategy and tend to include an overarching portfolio and change management experience.

How Is Success Measured?

It was refreshing to see that an overwhelming majority of organizations use explicit measures to track the effectiveness and success of their digital transformations. Because measures not only help show the value of organizations’ efforts, they also help align work across projects and ensure they stay on track. Hence, digital transformation measures tend to fall into four categories:

  1. Operational—given the primary drivers are operational, organizations are using measures of productivity and quality to track the value of their efforts.
  2. Financial—digital transformations are typically a large investment. Organizations use measures like cost reductions and ROI to measure the payoff of these investments and contribution to the bottom line.
  3. Implementation—digital transformations are large-scale efforts that span a portfolio of projects. Organizations use traditional project management measures like milestones and adoption rates to track their implementation efforts.
  4. Customer—traditionally digital transformations are directly linked with the goal of improving the customer experience and organizations use customer satisfaction indexes to measure success. However, without enough before and after data, organizations struggle to identify which changes directly impact their customer satisfaction.

There is a broad array of potential measures that organizations use to monitor their transformations. Ultimately the specific measures should reflect the organization’s drivers and strategy.  

Next Steps

Have a digital transformation success story to share?

We are continuing to explore organizations’ digital transformation programs. Particularly looking for answers to the questions posed above and to identify effective ways to translate an organization’s digital strategy into effective execution. Contact me at hlykehogland@apqc.org if you would like to participate in this study.

For more process and performance management research and insights, follow me on twitter at @hlykehogland or connect with me on LinkedIn.