Safeguard tech budgets by showing the full picture of tech’s value
When budgets tighten, one key to making the case for continued tech investment could be to capture more than traditional financial, productivity, and customer metrics, according to recent Deloitte research.
Tech budgets are increasing, as is scrutiny of tech’s value,1 especially as most CFOs remain cautious and risk averse.2 Yet to demonstrate the impact of tech investments, many leaders still focus mostly on traditional measures, according to our research, which could shortchange the real value that tech investments generate—and run the risk of having tech programs defunded or underfunded if leadership doesn’t see the kind of return they’d expected or desired.3
In 2023, Deloitte’s Center for Integrated Research surveyed 1,600 business and technology leaders from across industries and around the world to learn which KPIs they use to measure the value of their tech investments. Respondents’ most used KPIs were traditional financial, process performance, and traditional customer metrics (figure 1). While these are fundamental measures, focusing solely on them can risk missing the broader impacts of technology’s value.
Many digital technologies affect the whole organization, its people, and even the planet—for example, by helping companies improve resource efficiency and reduce their environmental impact.4 An organization’s tech investments can also lead to downstream reputational, societal, or even emotional impacts that may not show up in common KPIs.
To fully assess the value of tech investments—and, therefore, protect them—organizations should look both at and beyond their most common impact measures to determine other benefits the tech brings. This wider measurement scope can provide a more complete picture of the value generated, help justify continued funding, and offer a sound and consistent rationale for when not to invest.
Globally, 46% of organizations in the sample, on average, reported that they use purpose-related KPIs “to a large or very large extent” to assess tech’s impact. Sustainability; social ROI; and workforce diversity, equity, and inclusion were among those measures, according to the report. Similarly, sometimes hard-to-quantify workforce KPIs that measure things like talent mobility, experimentation culture, the number of agile teams, and employee retention were among the lowest-used metrics to assess digital value, the survey found.
It can be worth the effort for leaders to expand measurement approaches. According to the research, organizations that adopted a holistic framework for evaluating technology value beyond just financial, process, and customer metrics were 20% more likely to see significant enterprise value from their digital transformations. “It’s possible that, by more holistically measuring value, these organizations can better capture and illuminate it,” says Diana Kearns-Manolatos, a report co-author and the technology transformation research leader in Deloitte’s Center for Integrated Research at Deloitte Services LP. They can illuminate value when they uncover what was always there, but not measured. According to Kearns-Manolatos, organizations might better capture value because “these measures and metrics, in the long term, allow companies to make better [technology] investments and avoid the risk of defunding or underfunding important programs because they’re not accurately reflecting the value of them. And that data intelligence can allow them to better manage those programs going forward.”
Survey respondents said that the barriers to widening their measurement approach include data and collaboration challenges around defining, collecting, and tracking impact measures. In other words, because it’s difficult to predict downstream ripple effects, tech teams could lack the cross-functional relationships needed to connect their tech investments to the full scope of enterprise value impacts.
To address this, consider “uncovering your organization’s purpose-related priorities and how you’ll measure progress against them,” suggests Garima Dhasmana, a report co-author and principal with Deloitte Consulting LLP’s banking and capital markets practice. “In other words, determine a KPI framework based on your values. Then tie all major tech initiatives back to these KPIs for traceability and accountability around intended commitments. This will help you discover those hidden interdependencies between purpose and tech value that we’ve discussed in our report.” The report also notes working with other functions like HR that may already measure relevant workforce health KPIs that translate to tech value. Similarly, corporate sustainability teams likely have important insights to share.
According to Sam Roddick, global head of Deloitte Digital: “Tech has gone from a productivity tool at the periphery of business to a central, supporting function. It very much is the business now.” Therefore, while soft metrics can be complex to quantify, doing so could be essential given technology’s expansive role across the modern enterprise. Regardless of economic headwinds, companies that can account for the diverse and proliferating benefits from technology investments have the potential to drive further funding and support through a deeper, more compelling business case.
