Digital KPIs - IMD Business School
News Stories · Innovation - Digital

IMD launches Digital Transformation KPI project

A new online tool is designed to measure the progress of a digital transformation project and improve the chances of success.
December 2023

In the fast-paced world of digital transformation, where the promise of innovation meets the challenge of implementation, failure rates loom ominously. Many organizations invest considerable resources, time, and effort, only for their digital transformation project to falter. Going by market surveys, a startlingly high 88% of digital transformation initiatives meet this fate, leaving organizations to deal with the aftermath of unrealized expectations.

Armed with years of academic research and practical field experience, Professor Michael Wade and Massimo Marcolivio, an expert in digital transformation, have sought to unravel the mysteries behind successful digital transformations and identify the factors and key metrics, that could steer businesses toward their goals.

The result is the Digital Transformation KPI project, an interactive online tool designed to support transformation leaders. Drawing from an extensive knowledge base of 80+ real-life cases, with 30+ measurement areas and 80+ KPIs, the tool undergoes regular updates based on ongoing research and field experience.

Research findings

Our research has unearthed four pivotal categories of business objectives, each intricately linked to how technology can profoundly impact performance with measurable results:

  • “New Sources of Value Creation” focuses on innovative ways to achieve revenue and profit. The integration of physical and digital is a relevant measurement area, and revenue of integrated offering can be used as a KPI. In 2022, the New York Times has reached $2.3 B revenues integrating digital and print, with digital accounting for 56%.
  • “Operational Efficiency” is linked to stronger performances with the same or fewer resources. Speed on time to market is a valid measure, and reduction of time for product launch an adequate key performance indicator. For the new bottles of its updated personal care products, Unilever has adopted digital twins and 3-D printing, reducing launch time from 9 months to 5.
  • “Customer Engagement” refers to improving client interaction and satisfaction. The actual usage of dedicated apps is an important measurement area, and KPIs like the number of active users and the transaction volume are both reliable. In April 2023, the app of Australia’s Commonwealth Bank had 7.7m active users, with nearly 100m payments completed.
  • “Workforce Engagement” concerns satisfaction and productivity of people working for the organization. Performance can be reflected by a measure like workforce time reduction and a key performance indicator such as the number of hours saved. The e-commerce lingerie company Adore Me has adopted generative AI for product descriptions, saving 30 to 40 hours a month and re-focusing resources on more creative and high-impact projects.

Although a clear understanding of these four pillars is vital, there’s widespread confusion regarding the anticipated results of digital transformation. Take AI adoption, for instance; it can cut costs and pave the way for new business models. Yet, these objectives impact competitiveness in different ways and entail distinct roles, budget constraints and potentially conflicting goals.

Establishing business objectives is also central to engage all genuine stakeholders – we’ve encountered managers who believed they were leading digital transformation efforts, only to discover they were primarily focused on cost-cutting.

When it comes to implementation, as seen in the examples above, the results of successful digital transformation initiatives are measured via KPIs (key performance indicators) that are:

  • quantitative (percentage improvements or absolute gains)
  • across the four categories of business objectives (breadth matters)
  • within each business objective, not fewer than four (depth matters)
  • well defined in advance (not just hoping for good numbers “after the fact”)
  • monitored and fine-tuned continuously (based on new findings, resources, results, evolving needs)
  • both industry-specific (like subscriptions in media or defects reduction in manufacturing) and across sectors (disruption often leads to convergence)

Inadequate metrics leave organizations uncertain about their outcomes. For instance, some still gauge app success by downloads, instead of focusing on actual usage. Similarly, in AI, counting pilot projects doesn’t reflect genuine business impact. Accurate measurement is crucial, as errors can lead to valid initiatives being cut and flawed ones continued, wasting resources. KPIs are vital internally too, demonstrating value to executives, essential in the battle for budgets and management backing.

How to use the tool

For user-friendly navigation, the Digital Transformation KPI project tool displays each business objective category and its corresponding measures akin to planets surrounded by satellites. You can easily move them around by dragging. To pinpoint relevant KPIs for your transformation project, simply click on the bubbles to access specific details, such as case study examples or diverse measurement options.

Moreover, the toolbar at the top of the screen enables you to filter by business objective, sector, continent and other factors. Please note that in the rapidly changing landscape of digital disruption, the significance of filters might evolve (however, the reset button removes all the applied filters).

A key feature includes the ability to save or download data. While usage remains free of charge, registration is necessary for us to verify reliable sources and maintain a high-quality standard. If you wish to provide feedback without registering, simply click on the feedback button located at the bottom right of the page.

Despite the high failure rate, digital transformation remains the sole solution to disruption. Hence, establishing clear business objectives and accurate measurement of results is paramount. Through this complimentary online tool, we aim to provide support by sharing valuable knowledge. Explore the Digital Transformation KPI tool and determine how to effectively manage your project!

Learn more about the project at the Global Center for Digital Business Transformation.

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