Deloitte analysis shows 81% of respondents use productivity as the prime measure of digital transformation ROI. Are organisations factoring the right KPIs to measure digital transformation success? Our data shows respondents with a more holistic mindset are 20% more likely to attribute medium-to-high enterprise value to their digital transformations.
Organisations seeking to win on digital transformation today face two juxtaposing truths, which are: A significant majority of business leaders agree that digital transformation is the most important investment they can make to drive enterprise value. And an even greater majority of business leaders agree that they’re struggling to measure the value produced by their digital transformation investments. That is not to say that they’re not tracking value. The problem, however, is that the everyday go-to metrics just aren’t measuring up.
Deloitte conducted a study of 1,600 leaders to understand how they ascribe digital value. Our analysis revealed the structure, leading indicators, gaps and hidden links in digital value measurement. Amidst the many concerns of leaders seeking to improve how their organisations measure digital transformation value, those who report the greatest value realised share several traits:
Creating the digital transformation value framework
Digital transformation is “the single most important investment now and into the future that organisations can make to drive enterprise value,” according to 68% of respondents from Deloitte's 2023 Measuring Value from Digital Transformation survey. However, they struggle to measure that value with 73% citing the inability to define metrics the top barrier.
As a foundation to help leaders standardise how they ascribe digital value, Deloitte surveyed 1,600 respondents about their usage of key performance indicators (KPIs) in sizing and measuring it all. Our analysis looked at 46 KPIs across five value categories: Financial, Customer/Client, Process, Workforce and Purpose.
Exploratory analysis1 clustered the KPIs into ten sub-categories, giving a finer grain as to from where (globally) enterprises expect value to emerge. While these groupings are logical prima facie, they reflect the data and how KPIs often are used together. This is the structure of digital transformation value. It paints the picture as to where exactly respondents - globally and based on country, sector, type and other factors - see value emerging with different levels of importance.
How are organisations looking at that full picture of digital value? Based on the global data, we can see the most-frequently-used digital value indicators is Productivity (81%). It is used over 5X more frequently than the least commonly used KPI (Share price volatility). The other dominant digital transformation KPIs are what one would expect: Budget vs. actual cost, Employee productivity, Customer engagement, Return on Investment and Operating Margin.
When we zoom out and look at the use across the 46 KPIs, the bigger picture emerges. We’re able to see which KPIs have high, medium and low utilisation across global respondents. Not every KPI will be important for every organisation; therefore, organisations need to critically assess, based on strategic importance, whether low usage is by design or an oversight. For example, these priorities vary by geography and industry.
Harnessing the potential of digital value measurement
Understandably, measuring digital value is not without challenges. Our analysis shows that 73% of respondents believe that the ‘Inability to define exact impacts or metrics’ is a barrier to measuring digital value. ‘Inability to collect data’ as well as ‘Organisational silos’ rank in the top three. However, it’s worth getting right.
We looked at organisations that went the extra mile to measure digital value more holistically and found clear enterprise impacts. Respondents fell into four buckets based on how they used digital transformation KPIs, each measuring more intensely than the last: Classic, Broad, Engaged and All-in respondents.
All-in respondents self-reported that a larger share of their enterprise value could be attributed to digital transformation than the other groups. Almost half (41%) of All-in respondents reported they attribute a medium-to-high share enterprise value to their digital transformations, more than any of the three groups.2 In fact, our analysis found they’re as much as 20% more likely than the lowest performing group to attribute a medium/high share of their enterprise value to digital transformation.3
The bottom line: when more holistic measurement is achieved, the broader your view of digital potential, the less systemic your measurement barriers and the more likely you are to attribute medium-to-high enterprise value to digital transformation.
Read the full report to learn more about the digital transformation value framework, where organisations are over and under-indexing on specific KPIs, missing value links and how to achieve an “All-in” approach to measuring digital transformation success.