The world we live in today is characterized by constant disruptions. To stay relevant, businesses must prioritize digital transformation.
Most forward-looking business leaders recognize the need to make the transition to digital and have been investing heavily in it.
According to IDC Research Director Shawn Fitzgerald, direct digital transformation investments will grow at a CAGR of 17.5 percent between 2020 and 2023, and is expected to reach US$ 1.7 trillion as companies strive to become digital-at-scale.
It takes time for the benefits of transforming digitally to be apparent, and often, these results are not presented in a clear, tangible form.
The conundrum faced by many organizations that are looking to transform is how to adequately gauge and measure the ROI of implementing digital solutions.
To measure the ROI of digital transformation in a way that would bring value, leaders ought to consider the following.
Prior to adopting any digital strategy, they must first have clarity on the ‘whys’ and ‘hows’ of the transformation.
While there will be many reasons that will justify transformation, it should be consolidated into a single, clear objective that is identifiable across the organization.
Some of these objectives might include increasing employee engagement, operational efficiency, or enabling transparency.
Simply identifying the motivation of transformation will not be enough, there too must be specific and measurable outcomes. Outcomes serve as milestones along the transformation journey, helping organizations stay on the right track and always keep the end in mind.
For example, a realistic outcome for a company that aims to increase operational efficiency would be to free up employees to attend to other responsibilities.
Once outcomes are drawn out, organizations can start developing the appropriate metrics and strategies to best achieve them.
Business leaders must also exercise patience, and expect hurdles along the way.
When a new digital tool is adopted, for example, productivity might take a slight hit as employees learn how to use it. There is a good chance that this is temporary, and should not be taken as an indicator of failure.
In such instances, business leaders ought to take a step back, and determine the root cause of the problem instead of immediately pulling the plug.
Often, the solution would simply be to pivot, and leaders must ensure that their organization is flexible enough to do so.
Undeniably, the breadth and depth of what digital transformation encompasses is vast.
Companies might start off their journey with ambitious goals and even a digital mindset, but if there are no specific outcomes that can bring about measurable ROIs, transformation journeys would come to a halt, leaving companies with wasted time and resources.
Therefore, it is crucial that companies prioritize this while drawing up a digital transformation roadmap, so that they can see a great ROI from all their investments and efforts in transforming digitally.