Admit it; digital transformation isn’t a luxury anymore; it’s an absolute necessity in today’s modern digital business landscape. And enterprises just can’t overlook its efficiency, agility, productivity, and overall revenue advantages.
While most businesses have navigated their digital transformation journey, many are all set to jump on the digital transformation bandwagon by leveraging cutting-edge technology.
However, adopting the latest tools and technologies doesn’t necessarily mean that you’ve geared your organization to smoothly navigate the big change on the growth path. You must measure your progress and make the necessary adjustments to steer your business in the right direction.
Hence, you must evaluate your ROI to ensure you’re on the right track of thriving business success.
But when evaluating your ROI, most businesses aren’t aware of the key indicators that portray the success of their investments. Let’s figure out how you can determine the returns from your digital transformation investment.
Why it’s important to measure the impact of Digital Transformation initiatives?
While global digital transformation spending exceeds every year, businesses are becoming more productive, cost-efficient, and enhancing operational efficiency.
Whether we talk about incorporating cutting-edge technologies, including cloud computing, machine learning, or artificial intelligence, every enterprise is in the race to deliver a flawless user experience backed by robust security.
However, all these perks come with a price. And organizations spend millions of dollars yearly to become technologically advanced in the ever-expanding modern digital world. But when we see things from another perspective, many organizations need to deliver value to their customers on time and within budget.
And it’s not just about customer experience or operations that get impacts; inadequate evaluation of digital transformation expenditure may also hamper your seed round fundings and could eventually leave you gasping for funds for new projects.
Hence, it’s essential to quantify your digital transformation initiatives to understand whether you’ve invested in the right aspect or not. At the same time, comparing the potential return on investment gives you a better idea regarding allocating resources and funds to fruitful programs.
Apart from this, many businesses make the mistake of investing heavily in advanced systems without considering that their employees might take time to adjust to the newly established infrastructure.
And these sudden shifts also hamper a company’s overall performance and value. Hence, it’s essential to take small steps towards digital transformation and analyze what brings impact and what isn’t working for business.
How to Evaluate the ROI of Your Digital Transformation Investment
We’ve learned about the importance of evaluating the ROI of digital transformation; let’s understand how you can determine the same.
#1. Employee Satisfaction
You know you’ve invested in the right digital asset if your employees are satisfied with the new technology on board. Recent technological advancements, including cloud computing, AI tools, and ERP systems, enhance employee experience and satisfaction.
Understanding how happy and satisfied your workforce is with the new technology is undoubtedly the best way to quantify the return on investment of your transformation initiative.
Sometimes, the new advancement in the current infrastructure may hamper operations and lead to unnecessary workload on your employees. At that point, you must take the necessary steps to determine the gap and ensure your employees are well-equipped with the knowledge and skills to leverage the technology fully.
#2. Improved Revenue Stream
You can’t ignore your revenues when evaluating your investment returns on digital transformation. Any investment within your organization, whether in terms of tool or technology, ultimately aims to increase business revenues and generate new revenue streams. And if you can find good returns after further advancement.
However, most businesses may initially have yet to notice a major revenue increase since most advancements offer profits in the long run. So, it’s always better not to keep an unrealistic short-term gain approach when investing in technology in the long run.
#3. Employee Efficiency
While most digital transformations aim to enhance user experience and deliver secure customer access, many enterprises emphasize streamlining their inner operations to improve employee efficiency.
Your employees are the backbone of your business. And if they aren’t performing well, you’ll lag behind the competition. Invoking technology into your business processes to improve employee efficiency is undeniably the best way to reap the benefits of modern technology.
Once you’ve invoked the true potential of technology into your processes, you will certainly witness enhancement in the efficiency of your employees that further improves your overall business performance. And you just need to ensure that you utilize the operational efficiencies correctly.
#4. Cost Reduction of Operations
Another crucial indicator of the successful deployment of technology with an adequate return on investment is the overall reduction in the cost of operations.
If your overall operation costs are decreasing, gradually or slowly, you’ve invested in the right technology or tools that are steering your organization toward the right path.
Sometimes, legacy systems are the real culprit when it comes to saving the overall operational costs of an organization. Hence, incorporating cutting-edge technology and modern ERP or CRM tools aids operational efficiency that further enhances revenues.
#5. Better Data Security and Privacy Assurance for Customers
You know you’ve invested in the right technology if your customers begin trusting your brand and platform while sharing their details. Every user today knows that their privacy matters and that the data they share must be stored, transferred, and used securely by the service provider.
And if a business fails to do so, it isn’t the right choice for them to rely on! Yes, increasing customer trust in your brand is yet another indicator that you’ve invested in the right technology that offers seamless and secure experiences to your customers.
Investing in customer identity and access management solutions, multi-factor authentication systems, and data encryption are classic examples of leveraging technology to meet your customers’ security & privacy expectations.
To Conclude
While every business is swiftly adopting technology to digitally transform itself, it’s crucial to be mindful of technology’s overall impact in the long run. Evaluating the ROI of your digital transformation investment is the most crucial aspect of scaling your business.
And the success of your digital transformation certainly depends majorly on the fact that whether you’ve timely evaluated the ROI of digital transformation or not.
