One of the Techstrong websites, Digital CXO, recently published an article that talks about how digital transformation can be measured with some simple metrics and expressed as value of investment in a competitive landscape. The article covers a set of parameters and a framework that can help tell if a company’s digital initiatives are paying off the way they should.
What’s Digital Transformation in Plainspeak?
As businesses trod towards a future where they live online more fully, spotlight is being shone on digital transformation. Once a buzzword that lived in the fringes, the term “digital transformation” has slid into the heart of the organizational playbook.
Simply put, digital transformation is the transition to digital. It’s when an organization capitalizes technology to accelerate internal processes, meet customer expectations and deliver a differentiated experience. Some facets of digital transformation are automation, data analytics, e-commerce and so on.
But what is all the fuss about? It has become plain to businesses over the past few years that they cannot reap the advantages of next-gen technologies without setting digital transformation in motion within the organization.
Why? Because the digital and physical worlds are rapidly becoming one, and to lead a company into this next chapter, one needs to amp up the investments in technology.
Digital transformation is the force-multiplier that will shape and mold businesses making them more resilient and adaptive to change in the coming days. Some are calling it a primer – a preparatory coat – to futureproof the business.
The first wave of digital transformation started when businesses recognized that the online platform was underleveraged, and they began the work of making information accessible online and products more connected.
This was no small jump in terms of the work involved. The overhaul took decades. Businesses that got it right made record increments in revenue, growing substantially as a result of the change. Other suffered hiccups and pauses on the way, but eventually got there.
During the COVID-focused months, enterprises once again doubled down on digital transformation kicking off the second wave. This time, the goal was to move the business wholly to a place where anybody connecting from anywhere in the world can have access and visibility to the resources they need.
“It became all about optimization of business processes to drive more value out of it and going back in and re-engineering what we already had,” says Mike Vizard, author and chief content officer at Techstrong.
“Now we’re on the cusp of a bunch of emerging technologies including AI and it feels like we might be driving a whole set of new use cases that are going to feed back into these digital process transformation initiatives.”
Steps and Principles
The core constructs of digital transformation include speed, value and customer satisfaction. Automation is a key example that amplifies all three. Automation not only accelerates those functions providing shorter time-to-market, but it also enables the processes to evolve and enhance on their own.
Increasingly businesses are relying on tooling to look at KPIs, gauge progress, determine targets to shoot for, and overall make decisions that enable and empower the people across the organization and the customers.
“It’s a little unsexy, especially for techies, to talk about metrics and value and business transformation but it actually makes a lot of sense,” says Stephen Foskett, president of Tech Field Day, during his appearance on Techstrong Gang. “Ultimately we have to prove that there is value to the things that we’re doing.”
“The way to prove to businesspeople that there’s value ,” he continues, “is to prove value using metrics that they understand. We have to look at things like customer satisfaction surveys, performance, net promoter score, resource utilization, and quality financial performance, because ultimately everything we’re doing in business is supposed to be related to the financial performance of the business.”
A lot gets lost in transit as information travels through the different levels and divisions. “Technology organizations tend to be guilty of creating metrics that are meaningful to them but mean nothing to the business. Like for example, the number of deploys per hour. Nobody tells you why do we need to do it, and what is the right number,” says Mitch Ashley, technology executive and analyst. “What I preach is to always create metrics that are in line of sight to a business metric.”
A good way of measuring and weighing returns on digital transformation is to leverage technologies that can measure performance and provide automated intelligence. An example is Broadcom’s ValueOps Insights, a platform that ingests data from various solutions, and produce automated reports and analytics on the performance of digital value streams. This provides eye-opening insights on how investments are aligned with the outcomes.
Organizations are also working on embedding value-tracking capabilities into their software as a way to monitor and manage the value alongside their projects without going through separate point solutions.
Takeaways
CEOs care most about profit and loss, and how an investment translates into a revenue stream determines future decisions. But digital transformation is more than simple gross margins and scaling of customers. It is vital to keeping pace in the digital arms race because falling behind can simply put an organization out of business.
Alan Shimel, founder and CEO of the Tech Strong Group reminds, “Perfunctory transformation is not going to be enough.” To become a digital organization that evolves continually through use of technology in all its aspects, a company needs to actively track its journey, identify the signals in the metrics, and respond to them.
Be sure to catch the Techstrong Gang show for more, or check out Digital CXO for more interesting reads on digital transformation. For more stories like this, keep reading here at Gestaltit.com.
