Traditional ROI models work poorly for transformative digital initiatives. Moving from a siloed, linear value chain to ecosystem-based digital value propositions requires new ways of measuring ROI. The real value of investments in digital transformation should produce long-term revenue growth, not short-term technology fixes. Therefore, the ability to measure the ROI for digital investments accurately is critical to ensuring long-term funding of digital transformation.
These investments are ultimately about business survival through disruption. Successful digital strategy leaders can demonstrate their progress by measuring the impact of digital investments for specific value propositions. As the scope for disruption spans the entire customer lifecycle, it affects everything from the supply chain and pre-sales to after-sales support. Disruptive transformation must be viewed as a strategic investment, as:
- Digital investments should focus on specific benefits in the value chain. At the same time, you’ll need to plan your digital investments knowing that you’ll have to allocate them to changing customer expectations. This has consequences for the investment model. Investment volumes get smaller but investment intervals shorter, to be able to adjust to changing customer demand.
- A classic ROI calculation is neither always feasible nor desirable for digital investments. Digital transformation changes business processes and models. ROI works best for single digital initiatives (for instance, online support for customer onboarding) but not so well for shifts in business models such as a shift to a subscription model.
- Outcomes and experience-based investments take budget from point-solution capex. Leading organizations allocate digital funds based on outcomes and experience development instead of digital bolt-on projects.
The report ROI Models Help Build The Business Case For Digital Initiatives helps digital leaders tackle digital transformation by evaluating the outcomes that they can deliver to their customers and organizations. It focuses on the business case for such disruptive investments and provides digital leaders a checklist to increase transformative investment in digital.