Jacques Wessels, CEO, FlowCentric Technologies.
As organizations increasingly launch digital initiatives, many of which have been accelerated by the disruption caused by the COVID-19 pandemic, it is up to CEOs to verify whether these initiatives deliver the expected business value and benefits.
This is the point of view of the CEO of FlowCentric Technologies, Jacques Wessels, who rejects the idea that the monitoring and management of digital projects is only the responsibility of functional leaders.
âWhile some metrics clearly need to be captured at the functional level, CEOs are ideally placed to assess performance across functions and regions, and to ensure that digital transformation projects stay on track,â he said. -he declares.
âCOVID has proven that to stay alive in business you need to be more effective and efficient, while reducing costs to strengthen margins. Ultimately, it’s the CEO’s responsibility to make it happen. It’s not only about defining the digital strategy in accordance with the organization’s goals and ensuring that all key players are involved, but also that the strategy is actually executed.
âWhat gets measured gets done,â he adds.
The importance of active involvement of CEOs in digital transformation has long been recognized. In its Global CEO Outlook 2018 survey, KPMG found that seven in ten CEOs out of 1,300 participants said they take personal responsibility for leading digital transformation within their organization. They âmade digital a personal crusadeâ.
Fast forward to 2021, and one of the key themes of the 2021 edition of KPMG’s survey was the determination of the 1,325 participating CEOs from 11 major markets to instill new levels of digital agility in their organizations.
According to KPMG, today’s CEOs – now seasoned COVID veterans – recognize that digital is at the heart of how businesses can create new sources of value. While emerging technologies have been ranked by UK CEOs as the biggest risk to growth, 77% see technology disruption more as an opportunity than a threat. Seventy-three percent say they intend to invest in disruption detection and innovation processes because they believe this is a critical step in enabling teams to think disruptively, challenge historical assumptions and traditional mindsets; and brainstorm new ideas for a very different market environment.
But while the need to embrace digital disruption is well understood, McKinsey & Co core partners Matt Fitzpatrick and Kurt Strovink argue that its link to business value is not. Many, if not most, CEOs tend to rate the success of their digital transformation project by the number of individual initiatives completed or underway.
However, simply taking projects off the drawing board does not guarantee that the organization will increase its revenue, market share, efficiency or competitiveness; yet most CEOs are unable to quantify the impact of their digital efforts on their bottom line.
They argue that the only way to do this is to continuously measure and track the impact and value creation of all digital initiatives.
Wessels agrees, but points out that before CEOs start measuring, they need to know why they are measuring.
âBefore embarking on a digital transformation exercise, make sure your strategy is in place. Then properly map your existing processes and technology infrastructure and prioritize what needs to be done to reduce the risk of focusing on the wrong areas. Then take incremental steps until your baseline is correct, before investing in additional technology, âhe says.
Wessels also believes that digital projects should be undertaken in incremental steps until the overall strategy is digitized.
âWe have seen the ‘big bang’ approach fail time and time again, especially with million dollar ERP implementation projects that go over budget and over time, costing the organization. far more than the cost of the project itself in terms of lost productivity and the inability to deliver the expected value, âhe says.
When it comes to assessing the value of a project, Wessels believes CEOs should consider the following eight metrics:
Company performance related to factors such as employees, customer onboarding, supplier performance, etc. have they improved?
This can be easily measured, for example, by using simple digital daily dairies that track what employees are doing and where they spend their time. This will quickly highlight whether teams or individuals are spending more time on non-essential or unprofitable tasks. Because it is measured, it can be corrected.
What is the level of adoption and friendliness?
Even the most innovative solution will not produce value if it is not used by the people whose lives it is supposed to improve. Businesses large and small around the world are littered with quietly forgotten – often costly projects.
Time required to build a digital application
Time stands by, especially in today’s rapidly changing digital world. A delay in the deployment of digital initiatives could lead to the competition or the production of an obsolete solution before it has even been implemented. It is therefore essential to set deadlines for the implementation of the project and to measure to what extent these are respected.
Has your innovation rate improved?
If you’re one of the two-thirds of CEOs for whom disruption is a goal, measuring the speed at which innovation is taking place within your organization is a no-brainer. If innovation takes too long, it will result in stagnation rather than disruption.
Did the company get a return on its digital investments?
This is one of the most important metrics to consider, the value being determined by the impact of individual and collective initiatives on achieving the organization’s strategic goals.
Percentage of annual technology budget dedicated to digital initiatives
Bold and disruptive digital initiatives require bold investments. Companies that withhold their spending on strategic initiatives are likely to experience less than satisfactory value. If maintaining increasingly complex and obsolete infrastructure and systems is consuming too much of your technology spend, it may be time to reconsider priorities.
Are business leaders’ incentives linked to value-creating digital incentives?
Business leaders need to be encouraged to succeed in their specific area of ââresponsibility. As digitization aims to increase margins and efficiency, it is clear that the incentives must be linked.
Are you reaching more customers?
One of the key goals of any digital transformation project is to improve the customer experience. If an organization is unable to increase its customer base or the proportion of customer spend, it will stagnate. Measuring loyalty and customer growth is therefore a vitally important metric to watch.