Digital transformation has become a necessity for organizations across the globe. With the market size expected to grow at a CAGR of 23% until 2030, it has become crucial for businesses to adopt digitalization to stay competitive. However, due to the complexity of the process ROI calculation could be an intimidating task. In this two-part mini-blog series, we will be discussing the digitalization ROI, how it can be measured, and what matrices can be used to demonstrate its value.
The first part of this series will focus on the importance of measuring the ROI for digitalization projects and how it can be done.
Digitalization ROI is the return on investment that businesses can expect to see from their digitalization projects. Measuring digitalization ROI is important because it helps businesses understand the impact of their digitalization projects on their bottom line. A typical ROI Framework takes into account five categories: employees, customers, infrastructure, innovation, and safety & soundness.
Each of the categories in the ROI framework presents opportunities for businesses to enhance their operations and drive better results. However, it’s crucial to take a focused approach and address these areas holistically.
To achieve their desired goals and boost shareholder value, C-suite executives have similar aspirations for their organizations. While every organization has its own unique workplace standards, philosophies, and objectives, there are ways to measure ROI for digital transformation that can be applied universally. With a comprehensive understanding of how digital transformation can help an organization achieve its specific goals, executives can make informed decisions on investments and implement digital initiatives that can positively impact their bottom line.
Review business objectives: Align digitalization initiatives with business objectives, and identify the metrics that will be used to measure the success of the project.
Identify initiatives: Identify the areas of the business that can benefit from digitalization, and prioritize the initiatives based on their potential ROI.
Define investment goals: Set clear investment goals for the project, including the expected ROI, and establish a timeline for achieving these goals.
Identify value matrices: Determine the matrices that will be used to measure the ROI of the project, and establish baseline matrices for comparison.
Determine time frames: Establish timelines for measuring the impact of the project on the value matrices, and monitor the project closely to ensure that it is on track to achieve the expected ROI.
Digitalization is a continuous process as it depends upon the pace at which the transition is taking place and the future objectives of the business. Hence, measuring and maximizing the ROI of digitalization projects is critical for organizations that want to stay competitive in today’s digital landscape. By using the digital ROI framework and following the steps for measuring ROI, organizations can determine the value of their digitalization initiatives and identify opportunities for improvement.
After exploring the intricacy of calculating ROI for digitalization projects, it has become clear that businesses that collaborate with digitalization experts tend to have more accurate assessments of the key performance indicators (KPIs) necessary to achieve a positive ROI by using templates and industry reference data.
At Trimasys, we provide our clients with the expertise to calculate their ROI using the PTC framework and required data. By leveraging these tools, businesses can make informed decisions about their digitalization projects and optimize their ROI.
In the next post, we will focus on the key considerations for maximizing the ROI of digitalization projects, such as project planning, agile implementation, and continuous improvement to ensure that businesses get the most out of their digital investments.
Stay tuned for part two….
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