Five ways to measure the success of digital investments
Forming a clear methodology to monitor the performance of digital investments is an essential part of any effort as organizations pursue their digital transformation efforts.
Business process and model transformations and cultural and developmental transformations are all part of digital transformation. Key performance indicators, which assess the profitability of digital transformation investment, are used to measure the success of digital investments. These analyzes verify that the investment meets or exceeds the initiatives’ projected rates of return.
As companies double down on their technology investments, the “EY-Parthenon 2022 Digital Investment Index (DII)” survey indicates that they are struggling to define their digital investment strategy.
Centralized governance and oversight
According to industry experts, those who are successful have adopted a centralized approach to governance and oversight of expenses and benefits. These companies also have formal processes in place to identify, measure and report on the results of digital investments.
The most important questions to answer are how organizations allocate capital to undertake this digital transformation and how they measure return on investment. The metrics that drive this ROI need to be understood by all stakeholders, from the CEO down to individual business units.
Framework for digital governance
It is essential to have a well-designed digital governance structure that establishes decision-making responsibilities, identifies who is responsible, and clearly articulates responsibility and ownership. This framework should also maintain continuous change management authority for the organization’s digital initiatives and support sales improvement, compliance, cost reduction and risk mitigation.
Stakeholders should be diverse
The digital transformation project will identify key stakeholders responsible for measuring digital returns. The main players involved in determining these measures have complexities and layers. It all starts with the person in charge of the company’s digital strategy.
Data is the key to analyzing success. Data is the lifeblood of any business, and having access to the right data at the right time is becoming increasingly vital for all stakeholders.
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It’s critical to remember that the same metrics that are used to gauge overall business success, such as Net Promoter Score, Return on Investment (ROI), Return on Invested Capital (ROIC), and Engagement employees, can also be applied to digital transformation projects. .
Data analytics methodologies and technologies should be selected on a case-by-case basis, focusing on how much business growth is enabled by the digital transformation effort and how teams are performing accordingly.
Businesses should design a digital transformation strategy and governance plan as part of their overall strategy. This can include an ongoing review of business goals and areas for further optimization, as well as investing time and resources to study existing tools that will help the business achieve its goals.
Due to inadequate planning and lack of established KPIs before embarking on a digital transformation project, many companies continue to fail to measure and achieve returns on digital investments. The first step in any digital transformation project is identifying the problem companies are trying to solve, the KPIs they will use to measure success, and collecting data.
It’s a struggle to measure results
The measure must be quantifiable, objective and presented in a transparent way, without negative consequences in case of failure. However, if the investment fails, it should fail quickly, allowing the business to pivot if necessary and move on to the next goal.
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