Digital transformation is defined as the integration of digital technology into all areas of businesses, resulting in fundamental changes in how they operate and deliver value to customers.
It’s also having a profound effect in ways that businesses had not initially anticipated. IDC for example estimates that accumulated global spend on digital transformation will approach $2 trillion by 2020, adding that successful business outcomes will no longer come with a dollar sign attached to them.
The new landscape
With that in mind, SAP Africa’s head of industry value advisory, Isabel Papadakis, looks at how the measures of success in business has changed in a digitally transformed world.
She specifically views aspects such as customer experience (CX) have become critical to businesses, but to quantify the value of CX-inspired digital transformation for a project is tricky. The value delivered by digital transformation and how that value is measured needs an urgent rethink, Papadakis warns.
Challenges with defining value
One of the challenges with defining value are the assumptions about why businesses conduct digital transformation projects.
“We boldly claim that digital transformation is what all customers want. We assume it will deliver better experiences or replace experiences, and we make the dangerous assumption that digital transformation will increase the amount of the value the organisation can deliver to its end customers,” says Papadakis.
Furthermore, she notes that the assumptions made are broadly driven by our view of value for something that is measured in cost, but the cost is one-dimensional. The value, in the modern sense of the word, is multidimensional and focuses more on qualitative aspects such as customer affinity than it does on dollars and cents.
Reframing value measurement
Reframing value measurement in digital transformation is the first step to transform your own thinking about value, the SAP Africa exec explains. Switching from business value, which is an internal measurement to customer value, which is an external measurement.
“When your measure of success are customer centric, your digital transformation projects have a better chance to affect deep change within the organisation and continuously deliver value throughout each iterative step of the project,” she adds.
Step two would be to move away from cost measurement to value measurement which can prove difficult. Assessing cost is easy as an organisation’s accounting practices are set up to track cost, but value-driven measurement will have to measure the success of each digital transformation project, and this requires the organisation to become adept at finding value metrics for smaller iterations of work.
Turning to data
How this is done is through data, Papadakis remarks.
Many organisations can’t even tell if they are delivering value because there is no benchmark from which to work, and data sets the benchmark, she adds.
“When that organisation then collaborates with a global digital transformation partner, they also gain visible over trends for digital transformation projects at similar organisations and make appropriate adjustments along with the way to ensure each iteration of the project delivers optimal value,” concludes Papadakis.[Image – Photo by Headway on Unsplash]