Measuring What Matters – Key Metrics for Assessing the Impact of Technology on Business Success
Key metrics for assessing the impact of technology on business success
As technology continues to play a vital role in shaping business strategies, Boards and tech teams have a crucial responsibility to ensure that technology initiatives are aligned with and contribute to overall business goals. However, simply implementing technology solutions isn't enough. To truly understand the value and impact technology has on your organisation, it's essential to establish relevant metrics and measurement mechanisms.
In this blog post, we'll explore the significance of measuring what matters, help identify appropriate key performance indicators (KPIs), and explain how tracking these metrics can demonstrate the value and impact of technology on your business.
The Importance of measuring what matters
Measuring what matters is essential for assessing the impact of technology on business outcomes. Boards and tech teams must establish a clear connection between technology initiatives and desired business outcomes - metrics are vital in achieving this alignment.
Aligning technology initiatives with business goals is a fundamental aspect of strategic planning. We've written about this before. Defining and tracking relevant metrics can establish a direct link between technology investments and success. This alignment ensures you can allocate resources to activities contributing to your organisation's strategic objectives. Metrics act as a guide, helping prioritise projects with the greatest potential to drive positive business outcomes.
Data-driven insights gained from metrics provide valuable information for informed decision-making. As a CTO, I rely on these insights to evaluate the success of technology investments, optimise resource allocation, and make necessary strategy adjustments. By measuring the right metrics, you, too, can access real-time information, allowing you to make the same informed decisions.
In addition to informing decision-making, tracking key metrics also serves as a means to demonstrate the value of technology to stakeholders. Technology initiatives often require significant investments of time, money, and resources. By tracking and presenting data-driven evidence of the impact on business outcomes, you can tangibly demonstrate technology's value to your organisation. This evidence enhances credibility and builds trust among stakeholders. It's also a powerful tool for gathering support for future technology initiatives.
Identifying appropriate key performance indicators (KPIs)
When measuring technology's impact on business outcomes, identifying the right KPIs is essential.
Here are our recommendations for identifying appropriate KPIs:
Focus on strategic objectives
KPIs are great but we tend to focus more on Objectives & Key Results (OKRs) here at Scryla. KPIs are used to measure performance but they don't tell you what needs to change or improve to drive the growth of those numbers. OKR is a quarterly goal-setting method that helps you improve performance and drive change. They are used to decide what needs to be changed, fixed, or improved. For example, one of the key OKRs for one of our clients is increasing performance of cloud services whilst also reducing the monthly costs. This might seem counterintuitive but they work due to the objectives we’ve put in place.
Collaborate with stakeholders
Involve relevant stakeholders, such as business leaders, to identify the KPIs that best reflect the impact of technology on their specific areas.
Balance qualitative and quantitative metrics
While quantitative metrics like revenue growth and cost savings are important, qualitative metrics such as user satisfaction and employee engagement also provide valuable insights.
Key metrics for assessing technology impact
To accurately assess the impact of technology on your business, it's crucial to establish key metrics that capture the various dimensions of its influence. These metrics provide valuable insights into the effectiveness of technology initiatives and their contribution to success.
Here are some key metrics to consider:
a) Revenue and cost-related metrics:
Revenue growth: Measure the impact of technology initiatives on overall revenue growth, such as through increased sales, improved pricing strategies, or expanded market reach.
Cost savings: Track the cost efficiencies achieved through technology, such as reduced operational expenses, streamlined processes, or better resource allocation.
b) Customer experience metrics:
Customer satisfaction: Assess the impact of technology on customer satisfaction levels using metrics like Net Promoter Score (NPS), customer retention rate, or customer feedback ratings.
Time to resolution: Measure how technology impacts problem resolution, reducing customer wait times and improving overall satisfaction.
c) Operational efficiency metrics:
Process efficiency:
Measure the impact of technology on process automation, reducing manual efforts and increasing productivity metrics such as cycle time, throughput, or defect rates.
Employee productivity: Measure the impact of technology on employee productivity, such as time saved on repetitive tasks, increased collaboration, or improved access to information.
d) Innovation metrics:
Time to market: Evaluate the speed at which new products or features are delivered to the market, highlighting the impact of technology on innovation and competitive advantage.
R&D investment: Track the return on investment (ROI) of technology-driven research and development activities, indicating the impact on future growth and market relevance.
Tracking and demonstrating impact
Once you've established your KPIs and key metrics, you must establish a robust system for tracking and reporting them effectively.
Here are our three key steps to help you do this:
Establish baseline metrics
Set a baseline for each identified metric to understand the starting point and measure progress over time.
Regular tracking and reporting
Implement a system to track metrics consistently and report progress to relevant stakeholders regularly, ensuring transparency and accountability.
Visualise data
Use graphics like charts, graphs, and dashboards to present data in an easily digestible form, helping people to understand what you're showing them and, in return, aid decision-making.
Measuring what matters is essential for assessing the impact of technology on business outcomes. You can effectively demonstrate technology's value to your organisation by identifying appropriate OKRs and tracking relevant metrics. The insights you gather from this data inform decision-making and help with better resource allocation, enhanced stakeholder buy-in, and continuous improvement.
If you want to embrace the role of strategic leader, you must use the relevant mechanisms to measure the impact of technology on business success. Let us take care of it for you. We’re here to help.
Possible measures:
Revenue Impact: Measure the direct impact of technology initiatives on revenue generation I.e. tracking the percentage of revenue derived from new products or features developed by the tech team or the revenue growth resulting from digital transformation efforts.
Cost Reduction: Cost savings achieved through technology optimizations and efficiencies. This KPI could encompass reductions in operational expenses, infrastructure/cloud costs, or IT support expenditures.
Time to Market: Showcase the speed at which technology solutions are delivered to the market. This KPI demonstrates the team's ability to rapidly innovate and launch new products or features, giving the organization a competitive advantage.
Customer Acquisition and Retention: Monitor the impact of technology on customer acquisition and retention rates. This could include tracking the number of new customers acquired through digital channels, customer churn rates, or customer lifetime value (CLTV) improvements resulting from technology-driven enhancements.
Customer Satisfaction: Measure customer satisfaction with the technology products or services provided. Utilize customer feedback surveys, NPS scores, or customer support ticket data to gauge the overall satisfaction levels and identify areas for improvement.
Productivity Improvements: Highlight the efficiency gains and productivity improvements resulting from technology initiatives. This could include tracking metrics such as reduced response times, increased transaction volumes, or decreased error rates.
Innovation and Intellectual Property: This KPI demonstrates the team's ability to drive technological advancements and create unique value for the organization.
Security and Compliance: Could involve tracking the number and severity of security incidents, compliance audit results, or certifications achieved.
Talent Retention and Satisfaction: Monitor employee satisfaction and retention rates within the technology team. This KPI reflects the team's cohesion, morale, and engagement levels, which can directly impact productivity and innovation.
Technology Roadmap Execution: Track the progress of executing the technology roadmap and achieving strategic milestones. This KPI demonstrates the team's alignment with the organization's long-term goals and the successful implementation of technology initiatives.