<img src="https://secure.agile-enterprise-365.com/781352.png" style="display:none;">

There’s only one metric that matters in digital transformation, and it’s not cost

27.04.2023

As more and more organizations join the never-ending journey that is digital transformation, it’s worth taking a look at how far we’ve come. 

Organizations are reshaping themselves, bringing in new talent, new technologies, and looking for the next big breakthrough. They are completely reshaping the customer and employee experience as they embrace the ubiquity of digital. 

But most enterprises aren't past the finish line—they are still in the middle of the course somewhere, wondering if they took a wrong turn or why they aren’t further along than they should be. There are a few wins sitting around, but a lot more to-dos and people impatiently waiting for things to change.

As digital leaders try to keep everyone rallied and moving forward, they have to stop and question what really matters and what they can stop worrying about.

It's not about the money

IDC estimates that spending on digital transformation has now crossed $1.8 trillion worldwide. The most shocking part of that number is that no one thinks it’s too high. 

We are in the “whatever it takes” days of digital transformation. The winners have already been established and are enjoying their head start in the digital economy. Every other organization is trying to figure out how to not miss the boat. 

So while CIOs don’t exactly have a blank check to work on digital transformation, let’s just say the check has room for a lot of digits. If you make it across the digital transformation threshold, you are not likely to have a lot of people at the end asking to see your receipts. 

It’s not (all) about the time

When you think about the plan for digital transformation, the first thought is the detailed three year guide, complete with benchmarks and goals for where you need to be by a certain date. 

Planning is essential for effective digital transformation. But if you take a few detours along the way, it doesn’t matter as long as you still get there. Very few boards are going to ask the successful CIO to go back and prove that they hit their metrics exactly when they said they would. 

It’s all about sustained value

The only metric that matters is, “Are you bringing value?” As long as the rest of the C-suite sees that a digital transformation project continues to create sustainable new value, it will continue to march on, and the digital leader will be celebrated. 

However, BCG reports that 70% of all digital transformation projects are failing to show that value. Most digital leaders are not getting the results they need to continue to justify the investment of time, talent, and resources.

Three categories of digital transformation

To figure out what’s going wrong, it’s helpful to think about three main categories of digital transformation projects. 

The first is the innovative work of discovering new digital business models and bringing in new revenue from digital streams. 

The second is overhauling the customer experience and striving to meet their continually growing expectations. 

The third is transforming your internal operations by streamlining and automating processes and building applications that make for a better employee experience.

Discovering new digital business models is the most exciting of the three, and the one that will get you fame inside and outside your company. But it also has the highest risk of failure and the longest time to show value. 

Focusing on the customer experience is extremely important and requires your best effort. But the risk of failure is still moderate. What you put out in the world needs must meet the ever-growing expectations of customers. It also takes time to build an ecosystem that truly delights your customers. 

That leaves transforming internal operations. It’s generally the least interesting for most digital professionals because it doesn’t attract the headlines like the other categories. However, digitally transforming your internal operations is a fairly low risk activity and can be done quickly. 

And most importantly, it delivers sustainable value quickly. 

For example, organization-wide applications related to finance and HR give everyone a peek into the true value of digital transformation, and they are relatively easy to produce. IT developers can easily work alongside department heads and those closest to the problem to create great solutions. Low- and no-code platforms make it possible for those citizen developers to own a lot of the creation or maintenance, with the proper IT governance principles in place.

Mitigating the risk

If the core metric of digital transformation is value, then you want to always have something to show the positive impact of your work. By focusing on transforming internal operations, you are able to start off with a lot of value right out of the gate and build momentum as you work on the other more lofty goals. 

Internal operations are also highly visible to the entire company and get everyone excited about what is coming. Something as simple as an efficient expense reporting tool or a leave request application takes very little time to build, but generates a lot of positive and immediate value.

While boards and CEOs don’t plan to stop investing in digital transformation, they may stop investing in digital leaders who can’t show value quickly enough. By focusing on modernizing internal operations, CIOs and transformation leaders are mitigating the risk of a failed digital transformation and building momentum for even greater work.