Three Essentials to Proving the Value of Digital Transformation

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by Gregg Ostrowski

Recently we have seen organizations deliver digital transformation projects at a speed and scale that was simply unimaginable prior to the pandemic.

Businesses haven’t really had a choice – their ability to innovate and deliver seamless digital experiences to customers and employees has often been the decisive factor in how they have managed through this challenging period.

But while digital transformation has undeniably enabled organizations to adapt to rapidly fluctuating customer needs, very few businesses have been able to accurately measure or report on the value or ROI of their innovation programs during the pandemic. The priority has been on continuing to serve customers and maintain operations and, understandably, hard metrics have taken second place.

Looking ahead, accelerated digital transformation is expected to become the norm even once the pandemic is over. But it seems highly unlikely that business leaders will continue to plough money into technology innovation without placing far more scrutiny on the commercial and operational benefits this investment will deliver.

Already, we’re speaking to clients who are reporting business stakeholders moving from a firefighting, ‘whatever it takes’ approach to digital transformation, to a more strategic, considered view instead.

Unfortunately, most IT departments don’t have the right tools and data to align digital transformation and technology performance to business outcomes in a meaningful way. In fact, a recent report found that 72% of technologists across the globe are already concerned that they don’t have the tools they need to maximize the full potential of the rapid innovation they have delivered during the pandemic.

Technologists, therefore, need to get on the front foot and ensure they can measure the impact of digital transformation, so that they can prove the enormous benefits that their skills and hard work have had on the business during the pandemic.

So, with that in mind, here are three essentials for technologists to start demonstrating the value of digital transformation:

  1. Connect full-stack observability to business outcomes

Firstly, ensure that you have full visibility across the IT estate, across both traditional, legacy IT systems and new, hybrid cloud environments, to monitor performance and identify issues early.

Beyond this, it’s essential to link this IT performance data to business outcomes so that you can understand how performance issues affect customers and the business, in real-time, and prioritize actions accordingly.

By connecting full-stack observability with real-time business metrics, not only are you able to deliver faultless digital experiences, but you can also track (and report on) how innovation and optimized technology performance is improving business outcomes.

  1. Link IT performance to specific, commercial goals

Wherever possible, look to link digital transformation to hard, commercial metrics such as customer experience, sales transactions and revenue.

For instance, track how digital transformation (and the new digital services or experiences it has delivered) is impacting customer retention and customer lifetime value (LTV). Or how digital transformation has affected staff productivity and engagement while operating remotely.

This correlation of technology and business data not only shows the commercial impact of digital transformation, but it also enables you to make smarter, strategic IT decisions based on actual business impact.

  1. Tie initial investments to the cost savings

What may seem like a far too large investment at first for many business leaders turns out to be a much-needed investment to ensure business continuity.

You should carefully consider proving the actual ROI for your organizations’ digital transformation initiatives. May it be from reduced cost in technology maintenance and operations or security breaches you were able to prevent and avoid spending too much money on, it’s time to get your stats ready. Streamline the costs saved compared to how it would have impacted the revenue if no precautions were made before.

These steps are essential to showcasing the success of your digital transformation efforts. It’s the only way to measure and report on the value new technology brings to the business.

Gregg Ostrowski is the Executive CTO at Cisco AppDynamics.

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